YTO Express (International) Holdings (HKG:6123) Is Paying Out A Larger Dividend Than Last Year

The board of YTO Express (International) Holdings Limited (HKG:6123) has announced that it will be increasing its dividend on the 8th of July to HK$0.065. Although the dividend is now higher, the yield is only 2.9%, which is below the industry average.

Check out our latest analysis for YTO Express (International) Holdings

YTO Express (International) Holdings' Earnings Easily Cover the Distributions

It would be nice for the yield to be higher, but we should also check if higher levels of dividend payment would be sustainable. Before making this announcement, YTO Express (International) Holdings was easily earning enough to cover the dividend. This means that most of its earnings are being retained to grow the business.

Looking forward, earnings per share could rise by 122.4% over the next year if the trend from the last few years continues. If the dividend continues on this path, the payout ratio could be 5.4% by next year, which we think can be pretty sustainable going forward.

YTO Express (International) Holdings' Dividend Has Lacked Consistency

YTO Express (International) Holdings has been paying dividends for a while, but the track record isn't stellar. This suggests that the dividend might not be the most reliable. Since 2015, the first annual payment was HK$0.016, compared to the most recent full-year payment of HK$0.065. This implies that the company grew its distributions at a yearly rate of about 22% over that duration. It is great to see strong growth in the dividend payments, but cuts are concerning as it may indicate the payout policy is too ambitious.

The Dividend Looks Likely To Grow

With a relatively unstable dividend, it's even more important to evaluate if earnings per share is growing, which could point to a growing dividend in the future. YTO Express (International) Holdings has seen EPS rising for the last five years, at 122% per annum. A low payout ratio gives the company a lot of flexibility, and growing earnings also make it very easy for it to grow the dividend.

YTO Express (International) Holdings Looks Like A Great Dividend Stock

Overall, a dividend increase is always good, and we think that YTO Express (International) 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 in all, this checks a lot of the boxes we look for when choosing an income stock.

Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. However, there are other things to consider for investors when analysing stock performance. For example, we've picked out 2 warning signs for YTO Express (International) Holdings that investors should know about before committing capital to this stock. 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.