Tianjin Port Development Holdings' (HKG:3382) Dividend Will Be Increased To HK$0.06

Tianjin Port Development Holdings Limited (HKG:3382) has announced that it will be increasing its dividend on the 22nd of July to HK$0.06. This will take the annual payment from 8.7% to 8.7% of the stock price, which is above what most companies in the industry pay.

View our latest analysis for Tianjin Port Development Holdings

Tianjin Port Development Holdings' Payment Has Solid Earnings Coverage

While it is great to have a strong dividend yield, we should also consider whether the payment is sustainable. However, Tianjin Port Development Holdings' earnings easily cover the dividend. This means that most of what the business earns is being used to help it grow.

Over the next year, EPS could expand by 11.7% if recent trends continue. If the dividend continues on this path, the payout ratio could be 35% by next year, which we think can be pretty sustainable going forward.

Dividend Volatility

The company has a long dividend track record, but it doesn't look great with cuts in the past. The first annual payment during the last 10 years was HK$0.048 in 2012, and the most recent fiscal year payment was HK$0.06. This implies that the company grew its distributions at a yearly rate of about 2.2% over that duration. It's encouraging to see some dividend growth, but the dividend has been cut at least once, and the size of the cut would eliminate most of the growth anyway, which makes this less attractive as an income investment.

The Dividend Looks Likely To Grow

With a relatively unstable dividend, it's even more important to see if earnings per share is growing. We are encouraged to see that Tianjin Port Development Holdings has grown earnings per share at 12% per year over the past five years. Tianjin Port Development Holdings definitely has the potential to grow its dividend in the future with earnings on an uptrend and a low payout ratio.

Tianjin Port Development Holdings Looks Like A Great Dividend Stock

Overall, a dividend increase is always good, and we think that Tianjin Port Development Holdings is a strong income stock thanks to its track record and growing earnings. Earnings are easily covering distributions, and the company is generating plenty of cash. All of these factors considered, we think this has solid potential as a dividend stock.

Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. Taking the debate a bit further, we've identified 2 warning signs for Tianjin Port Development Holdings that investors need to be conscious of moving forward. If you are a dividend investor, you might also want to look at our curated list of high yield 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.