Qinhuangdao Port (HKG:3369) Is Paying Out A Larger Dividend Than Last Year

Qinhuangdao Port Co., Ltd. (HKG:3369) will increase its dividend on the 25th of August to CN¥0.0772, which is 18% higher than last year's payment from the same period of CN¥0.0656. The payment will take the dividend yield to 5.6%, which is in line with the average for the industry.

See our latest analysis for Qinhuangdao Port

Qinhuangdao Port's Payment Has Solid Earnings Coverage

Unless the payments are sustainable, the dividend yield doesn't mean too much. However, Qinhuangdao Port's earnings easily cover the dividend. As a result, a large proportion of what it earned was being reinvested back into the business.

If the trend of the last few years continues, EPS will grow by 6.0% over the next 12 months. If the dividend continues on this path, the payout ratio could be 23% by next year, which we think can be pretty sustainable going forward.

Qinhuangdao Port's Dividend Has Lacked Consistency

Even in its relatively short history, the company has reduced the dividend at least once. If the company cuts once, it definitely isn't argument against the possibility of it cutting in the future. Since 2014, the annual payment back then was CN¥0.32, compared to the most recent full-year payment of CN¥0.071. This works out to a decline of approximately 78% over that time. Declining dividends isn't generally what we look for as they can indicate that the company is running into some challenges.

Qinhuangdao Port Could Grow Its Dividend

Given that the track record hasn't been stellar, we really want to see earnings per share growing over time. It's encouraging to see that Qinhuangdao Port has been growing its earnings per share at 6.0% a year over the past five years. A low payout ratio and decent growth suggests that the company is reinvesting well, and it also has plenty of room to increase the dividend over time.

Our Thoughts On Qinhuangdao Port's Dividend

Overall, this is a reasonable dividend, and it being raised is an added bonus. While the payout ratios are a good sign, we are less enthusiastic about the company's dividend record. 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. However, there are other things to consider for investors when analysing stock performance. As an example, we've identified 1 warning sign for Qinhuangdao Port that you should be aware of before investing. Is Qinhuangdao Port not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

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