Raymond Industrial (HKG:229) Is Increasing Its Dividend To HK$0.03

Raymond Industrial Limited's (HKG:229) periodic dividend will be increasing on the 5th of October to HK$0.03, with investors receiving 50% more than last year's HK$0.02. This makes the dividend yield 7.1%, which is above the industry average.

View our latest analysis for Raymond Industrial

Raymond Industrial's Payment Has Solid Earnings Coverage

If the payments aren't sustainable, a high yield for a few years won't matter that much. Before this announcement, Raymond Industrial was paying out 74% of earnings, but a comparatively small 26% of free cash flows. In general, cash flows are more important than earnings, so we are comfortable that the dividend will be sustainable going forward, especially with so much cash left over for reinvestment.

EPS is set to fall by 1.7% over the next 12 months if recent trends continue. Assuming the dividend continues along recent trends, we think the payout ratio could reach 75%, which is definitely on the higher side.

Raymond Industrial Has A Solid Track Record

The company has an extended history of paying stable dividends. The most recent annual payment of HK$0.06 is about the same as the annual payment 10 years ago. Although we can't deny that the dividend has been remarkably stable in the past, the growth has been pretty muted.

The Dividend's Growth Prospects Are Limited

Investors could be attracted to the stock based on the quality of its payment history. Let's not jump to conclusions as things might not be as good as they appear on the surface. Although it's important to note that Raymond Industrial's earnings per share has basically not grown from where it was five years ago, which could erode the purchasing power of the dividend over time.

In Summary

Overall, this is a reasonable dividend, and it being raised is an added bonus. With shrinking earnings, the company may see some issues maintaining the dividend even though they look pretty sustainable for now. The payment isn't stellar, but it could make a decent addition to a dividend portfolio.

Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. Just as an example, we've come across 2 warning signs for Raymond Industrial you should be aware of, and 1 of them is concerning. Is Raymond Industrial not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.