CITIC Telecom International Holdings' (HKG:1883) Dividend Will Be Increased To HK$0.185

The board of CITIC Telecom International Holdings Limited (HKG:1883) has announced that it will be paying its dividend of HK$0.185 on the 14th of June, an increased payment from last year's comparable dividend. This makes the dividend yield 7.6%, which is above the industry average.

See our latest analysis for CITIC Telecom International Holdings

CITIC Telecom 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. Before this announcement, CITIC Telecom International Holdings was paying out 76% of earnings, but a comparatively small of free cash flows. This leaves plenty of cash for reinvestment into the business.

Over the next year, EPS is forecast to expand by 30.0%. Under the assumption that the dividend will continue along recent trends, we think the payout ratio could be 64% which would be quite comfortable going to take the dividend forward.

CITIC Telecom International Holdings Has A Solid Track Record

The company has been paying a dividend for a long time, and it has been quite stable which gives us confidence in the future dividend potential. The dividend has gone from an annual total of HK$0.096 in 2013 to the most recent total annual payment of HK$0.245. This means that it has been growing its distributions at 9.8% per annum over that time. Dividends have grown at a reasonable rate over this period, and without any major cuts in the payment over time, we think this is an attractive combination as it provides a nice boost to shareholder returns.

CITIC Telecom International Holdings Could Grow Its Dividend

The company's investors will be pleased to have been receiving dividend income for some time. CITIC Telecom International Holdings has impressed us by growing EPS at 5.3% per year over the past five years. EPS has been growing at a reasonable rate, although with most of the profits being paid out to shareholders, growth prospects could be more limited in the future.

In Summary

Overall, this is probably not a great income stock, even though the dividend is being raised at the moment. The company is generating plenty of cash, but we still think the dividend is a bit high for comfort. Overall, we don't think this company has the makings of a good income stock.

Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. Are management backing themselves to deliver performance? Check their shareholdings in CITIC Telecom International Holdings in our latest insider ownership analysis. Is CITIC Telecom 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.