COSCO SHIPPING Ports' (HKG:1199) Dividend Will Be Increased To HK$0.16

COSCO SHIPPING Ports Limited's (HKG:1199) dividend will be increasing to HK$0.16 on 29th of September. Based on the announced payment, the dividend yield for the company will be 5.6%, which is fairly typical for the industry.

View our latest analysis for COSCO SHIPPING Ports

COSCO SHIPPING Ports Doesn't Earn Enough To Cover Its Payments

We like to see a healthy dividend yield, but that is only helpful to us if the payment can continue. Before making this announcement, COSCO SHIPPING Ports was paying a whopping 130% as a dividend, but this only made up 21% of its overall earnings. A cash payout ratio this high could put the dividend under pressure and force the company to reduce it in the future if it were to run into tough times.

Over the next year, EPS is forecast to expand by 6.1%. However, if the dividend continues growing along recent trends, it could start putting pressure on the balance sheet with the payout ratio getting very high over the next year.

Dividend Volatility

The company's dividend history has been marked by instability, with at least 1 cut in the last 10 years. Since 2011, the dividend has gone from US$0.03 to US$0.044. This works out to be a compound annual growth rate (CAGR) of approximately 4.0% a year over that time. The dividend has seen some fluctuations in the past, so even though the dividend was raised this year, we should remember that it has been cut in the past.

COSCO SHIPPING Ports Could Grow Its Dividend

Growing earnings per share could be a mitigating factor when considering the past fluctuations in the dividend. It's encouraging to see COSCO SHIPPING Ports has been growing its earnings per share at 6.7% a year over the past five years. COSCO SHIPPING Ports definitely has the potential to grow its dividend in the future with earnings on an uptrend and a low payout ratio.

Our Thoughts On COSCO SHIPPING Ports' Dividend

In summary, while it's always good to see the dividend being raised, we don't think COSCO SHIPPING Ports' payments are rock solid. With cash flows lacking, it is difficult to see how the company can sustain a dividend payment. We don't think COSCO SHIPPING Ports is a great stock to add to your portfolio if income is your focus.

It's important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. Just as an example, we've come across 4 warning signs for COSCO SHIPPING Ports you should be aware of, and 1 of them doesn't sit too well with us. Looking for more high-yielding dividend ideas? Try our curated list of strong dividend payers.

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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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