COSCO SHIPPING Ports (HKG:1199) Is Increasing Its Dividend To $0.151

COSCO SHIPPING Ports Limited (HKG:1199) will increase its dividend from last year's comparable payment on the 21st of November to $0.151. Despite this raise, the dividend yield of 4.7% is only a modest boost to shareholder returns.

AI is about to change healthcare. These 20 stocks are working on everything from early diagnostics to drug discovery. The best part - they are all under $10bn in marketcap - there is still time to get in early.

COSCO SHIPPING Ports' Future Dividends May Potentially Be At Risk

Even a low dividend yield can be attractive if it is sustained for years on end. Before making this announcement, COSCO SHIPPING Ports was earning enough to cover the dividend, but it wasn't generating any free cash flows. In general, we consider cash flow to be more important than earnings, so we would be cautious about relying on the sustainability of this dividend.

Looking forward, earnings per share is forecast to fall by 1.7% over the next year. If the dividend continues along the path it has been on recently, the company could be paying out more than double what it is earning, which is definitely a bit high to be sustainable going forward.

See our latest analysis for COSCO SHIPPING Ports

Dividend Volatility

The company's dividend history has been marked by instability, with at least one cut in the last 10 years. The annual payment during the last 10 years was $0.0394 in 2015, and the most recent fiscal year payment was $0.034. The dividend has shrunk at around 1.5% a year during that period. Declining dividends isn't generally what we look for as they can indicate that the company is running into some challenges.

COSCO SHIPPING Ports May Find It Hard To Grow The Dividend

Given that the dividend has been cut in the past, we need to check if earnings are growing and if that might lead to stronger dividends in the future. COSCO SHIPPING Ports has seen earnings per share falling at 2.4% per year over the last five years. If the company is making less over time, it naturally follows that it will also have to pay out less in dividends.

COSCO SHIPPING Ports' Dividend Doesn't Look Sustainable

Overall, this is probably not a great income stock, even though the dividend is being raised at the moment. With cash flows lacking, it is difficult to see how the company can sustain a dividend payment. This company is not in the top tier of income providing stocks.

Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. For example, we've picked out 1 warning sign for COSCO SHIPPING Ports that investors should know about before committing capital to this stock. Is COSCO SHIPPING Ports not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.