Raymond Industrial (HKG:229) Has Announced A Dividend Of HK$0.02

By
Simply Wall St
Published
August 29, 2021
SEHK:229
Source: Shutterstock

Raymond Industrial Limited (HKG:229) will pay a dividend of HK$0.02 on the 7th of October. This means the annual payment is 7.7% of the current stock price, which is above the average for the industry.

View our latest analysis for Raymond Industrial

Raymond Industrial's Payment Has Solid Earnings Coverage

A big dividend yield for a few years doesn't mean much if it can't be sustained. However, prior to this announcement, Raymond Industrial's dividend was comfortably covered by both cash flow and earnings. This means that most of its earnings are being retained to grow the business.

If the trend of the last few years continues, EPS will grow by 2.3% over the next 12 months. If the dividend continues on this path, the payout ratio could be 72% by next year, which we think can be pretty sustainable going forward.

historic-dividend
SEHK:229 Historic Dividend August 30th 2021

Raymond Industrial Has A Solid Track Record

Even over a long history of paying dividends, the company's distributions have been remarkably stable. The dividend has gone from HK$0.04 in 2011 to the most recent annual payment of HK$0.06. This means that it has been growing its distributions at 4.1% per annum over that time. While the consistency in the dividend payments is impressive, we think the relatively slow rate of growth is less attractive.

The Dividend's Growth Prospects Are Limited

The company's investors will be pleased to have been receiving dividend income for some time. Earnings has been rising at 2.3% per annum over the last five years, which admittedly is a bit slow. While EPS growth is quite low, Raymond Industrial has the option to increase the payout ratio to return more cash to shareholders.

Raymond Industrial Looks Like A Great Dividend Stock

Overall, we think that this is a great income investment, and we think that maintaining the dividend this year may have been a conservative choice. Earnings are easily covering distributions, and the company is generating plenty of cash. All of these factors considered, we think this has solid potential as a dividend stock.

Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. As an example, we've identified 2 warning signs for Raymond Industrial that you should be aware of before investing. Looking for more high-yielding dividend ideas? Try our curated list of strong dividend payers.

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