COSCO SHIPPING Energy Transportation (HKG:1138) Is Increasing Its Dividend To CN¥0.3835

COSCO SHIPPING Energy Transportation Co., Ltd. (HKG:1138) has announced that it will be increasing its dividend from last year's comparable payment on the 27th of August to CN¥0.3835. Although the dividend is now higher, the yield is only 3.7%, which is below the industry average.

See our latest analysis for COSCO SHIPPING Energy Transportation

COSCO SHIPPING Energy Transportation's Payment Has Solid Earnings Coverage

While yield is important, another factor to consider about a company's dividend is whether the current payout levels are feasible. Based on the last payment, COSCO SHIPPING Energy Transportation was quite comfortably earning enough to cover the dividend. This indicates that quite a large proportion of earnings is being invested back into the business.

The next year is set to see EPS grow by 90.1%. If the dividend continues along recent trends, we estimate the payout ratio will be 32%, which is in the range that makes us comfortable with the sustainability of the dividend.

COSCO SHIPPING Energy Transportation's Dividend Has Lacked Consistency

It's comforting to see that COSCO SHIPPING Energy Transportation has been paying a dividend for a number of years now, however it has been cut at least once in that time. This suggests that the dividend might not be the most reliable. Since 2015, the annual payment back then was CN¥0.03, compared to the most recent full-year payment of CN¥0.35. This means that it has been growing its distributions at 31% per annum over that time. COSCO SHIPPING Energy Transportation has grown distributions at a rapid rate despite cutting the dividend at least once in the past. Companies that cut once often cut again, so we would be cautious about buying this stock solely for the dividend income.

The Dividend Looks Likely To Grow

With a relatively unstable dividend, it's even more important to evaluate if earnings per share is growing, which could point to a growing dividend in the future. COSCO SHIPPING Energy Transportation has impressed us by growing EPS at 37% per year over the past five years. The company doesn't have any problems growing, despite returning a lot of capital to shareholders, which is a very nice combination for a dividend stock to have.

We Really Like COSCO SHIPPING Energy Transportation's Dividend

Overall, we think this could be an attractive income stock, and it is only getting better by paying a higher dividend this year. 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.

Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. For instance, we've picked out 2 warning signs for COSCO SHIPPING Energy Transportation that investors should take into consideration. If you are a dividend investor, you might also want to look at our curated list of high yield 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.

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