Bosideng International Holdings' (HKG:3998) Dividend Will Be CN¥0.05

Bosideng International Holdings Limited's (HKG:3998) investors are due to receive a payment of CN¥0.05 per share on 11th of January. This makes the dividend yield 5.4%, which is above the industry average.

Check out our latest analysis for Bosideng International Holdings

Bosideng International Holdings' Payment Has Solid Earnings Coverage

We like to see robust dividend yields, but that doesn't matter if the payment isn't sustainable. The last payment made up 76% of earnings, but cash flows were much higher. This leaves plenty of cash for reinvestment into the business.

Over the next year, EPS is forecast to expand by 55.6%. Assuming the dividend continues along the course it has been charting recently, our estimates show the payout ratio being 64% which brings it into quite a comfortable range.

Dividend Volatility

Although the company has a long dividend history, it has been cut at least once in the last 10 years. Since 2013, the dividend has gone from CN¥0.101 total annually to CN¥0.169. This implies that the company grew its distributions at a yearly rate of about 5.3% over that duration. We have seen cuts in the past, so while the growth looks promising we would be a little bit cautious about its track record.

Bosideng International Holdings' Dividend Might Lack Growth

Given that the dividend has been cut in the past, we need to check if earnings are growing and if that might lead to stronger dividends in the future. It's encouraging to see that Bosideng International Holdings has been growing its earnings per share at 27% a year over the past five years. Fast growing earnings are great, but this can rarely be sustained without some reinvestment into the business, which Bosideng International Holdings hasn't been doing.

In Summary

In summary, while it's always good to see the dividend being raised, we don't think Bosideng International Holdings' payments are rock solid. In the past, the payments have been unstable, but over the short term the dividend could be reliable, with the company generating enough cash to cover it. This company is not in the top tier of income providing stocks.

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 1 warning sign for Bosideng International Holdings that you should be aware of before investing. Is Bosideng International Holdings not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

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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.