Tianjin Binhai Teda Logistics (Group) (HKG:8348) Has Announced That It Will Be Increasing Its Dividend To CN¥0.0325

Tianjin Binhai Teda Logistics (Group) Corporation Limited's (HKG:8348) dividend will be increasing from last year's payment of the same period to CN¥0.0325 on 29th of August. The payment will take the dividend yield to 6.8%, which is in line with the average for the industry.

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Tianjin Binhai Teda Logistics (Group)'s Projections Indicate Future Payments May Be Unsustainable

While it is always good to see a solid dividend yield, we should also consider whether the payment is feasible. Before making this announcement, Tianjin Binhai Teda Logistics (Group)'s dividend was higher than its profits, but the free cash flows quite comfortably covered it. Healthy cash flows are always a positive sign, especially when they quite easily cover the dividend.

EPS is set to fall by 9.0% over the next 12 months if recent trends continue. If the dividend continues along recent trends, we estimate the payout ratio could reach 193%, which could put the dividend in jeopardy if the company's earnings don't improve.

Check out our latest analysis for Tianjin Binhai Teda Logistics (Group)

Dividend Volatility

The company's dividend history has been marked by instability, with at least one cut in the last 10 years. The dividend has gone from an annual total of CN¥0.10 in 2015 to the most recent total annual payment of CN¥0.0297. Dividend payments have fallen sharply, down 70% over that time. A company that decreases its dividend over time generally isn't what we are looking for.

Dividend Growth May Be Hard To Come By

Dividends have been going in the wrong direction, so we definitely want to see a different trend in the earnings per share. In the last five years, Tianjin Binhai Teda Logistics (Group)'s earnings per share has shrunk at approximately 9.0% per annum. If earnings continue declining, the company may have to make the difficult choice of reducing the dividend or even stopping it completely - the opposite of dividend growth.

Tianjin Binhai Teda Logistics (Group)'s Dividend Doesn't Look Sustainable

Overall, this is probably not a great income stock, even though the dividend is being raised at the moment. The payments haven't been particularly stable and we don't see huge growth potential, but with the dividend well covered by cash flows it could prove to be reliable over the short term. We would be a touch cautious of relying on this stock primarily for the dividend income.

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. Taking the debate a bit further, we've identified 4 warning signs for Tianjin Binhai Teda Logistics (Group) 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.