Shanghai Industrial Urban Development Group Limited's (HKG:563) dividend will be increasing to HK$0.045 on 24th of June. This takes the annual payment to 6.4% of the current stock price, which is about average for the industry.
Shanghai Industrial Urban Development Group's Earnings Easily Cover the Distributions
Solid dividend yields are great, but they only really help us if the payment is sustainable. Before making this announcement, Shanghai Industrial Urban Development Group was easily earning enough to cover the dividend. As a result, a large proportion of what it earned was being reinvested back into the business.
Looking forward, earnings per share could rise by 1.9% over the next year if the trend from the last few years continues. Assuming the dividend continues along recent trends, we think the payout ratio could be 41% by next year, which is in a pretty sustainable range.
Shanghai Industrial Urban Development Group Doesn't Have A Long Payment History
Shanghai Industrial Urban Development Group's dividend has been pretty stable for a little while now, but we will continue to be cautious until it has been demonstrated for a few more years. Since 2015, the first annual payment was HK$0.011, compared to the most recent full-year payment of HK$0.045. This means that it has been growing its distributions at 22% per annum over that time. We're not overly excited about the relatively short history of dividend payments, however the dividend is growing at a nice rate and we might take a closer look.
The Dividend's Growth Prospects Are Limited
Investors could be attracted to the stock based on the quality of its payment history. Shanghai Industrial Urban Development Group hasn't seen much change in its earnings per share over the last five years. If Shanghai Industrial Urban Development Group is struggling to find viable investments, it always has the option to increase its payout ratio to pay more to shareholders.
Overall, it's great to see the dividend being raised and that it is still in a sustainable range. The payout ratio looks good, but unfortunately the company's dividend track record isn't stellar. The payment isn't stellar, but it could make a decent addition to a dividend portfolio.
Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. However, there are other things to consider for investors when analysing stock performance. For example, we've identified 4 warning signs for Shanghai Industrial Urban Development Group (1 makes us a bit uncomfortable!) that you should be aware of before investing. Is Shanghai Industrial Urban Development Group not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.
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