Shanghai Industrial Urban Development Group's (HKG:563) Upcoming Dividend Will Be Larger Than Last Year's

March 30, 2022
  •  Updated
April 16, 2022
SEHK:563
Source: Shutterstock

Shanghai Industrial Urban Development Group Limited (HKG:563) has announced that it will be increasing its dividend on the 24th of June to HK$0.045, which will be 4.7% higher than last year. This makes the dividend yield about the same as the industry average at 6.3%.

View our latest analysis for Shanghai Industrial Urban Development Group

Shanghai Industrial Urban Development Group's Payment Has Solid Earnings Coverage

Unless the payments are sustainable, the dividend yield doesn't mean too much. However, prior to this announcement, Shanghai Industrial Urban Development Group'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.

Looking forward, earnings per share could rise by 1.9% over the next year if the trend from the last few years continues. If the dividend continues on this path, the payout ratio could be 41% by next year, which we think can be pretty sustainable going forward.

historic-dividend
SEHK:563 Historic Dividend March 30th 2022

Shanghai Industrial Urban Development Group Is Still Building Its Track Record

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$0.043. This means that it has been growing its distributions at 22% per annum over that time. The dividend has been growing rapidly, however with such a short payment history we can't know for sure if payment can continue to grow over the long term, so caution may be warranted.

Shanghai Industrial Urban Development Group May Find It Hard To Grow The Dividend

Some investors will be chomping at the bit to buy some of the company's stock based on its dividend history. Although it's important to note that Shanghai Industrial Urban Development Group'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. Earnings growth is slow, but on the plus side, the dividend payout ratio is low and dividends could grow faster than earnings, if the company decides to increase its payout ratio.

In Summary

In summary, it's great to see that the company can raise the dividend and keep it in a sustainable range. The payout ratio looks good, but unfortunately the company's dividend track record isn't stellar. The dividend looks okay, but there have been some issues in the past, so we would be a little bit cautious.

It's important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. Case in point: We've spotted 4 warning signs for Shanghai Industrial Urban Development Group (of which 1 is a bit concerning!) you should know about. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.

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About SEHK:563

Shanghai Industrial Urban Development Group

Shanghai Industrial Urban Development Group Limited, an investment holding company, primarily engages in the development and sale of residential and commercial properties in the People’s Republic of China.

The Snowflake is a visual investment summary with the score of each axis being calculated by 6 checks in 5 areas.

Analysis AreaScore (0-6)
Valuation3
Future Growth0
Past Performance1
Financial Health4
Dividends2

Read more about these checks in the individual report sections or in our analysis model.

Adequate balance sheet and fair value.