Sichuan Energy Investment Development's (HKG:1713) Shareholders Will Receive A Bigger Dividend Than Last Year

Sichuan Energy Investment Development Co., Ltd.'s (HKG:1713) dividend will be increasing from last year's payment of the same period to CN¥0.1433 on 25th of July. This takes the dividend yield to 8.1%, which shareholders will be pleased with.

Check out our latest analysis for Sichuan Energy Investment Development

Sichuan Energy Investment Development's Earnings Easily Cover The Distributions

While it is great to have a strong dividend yield, we should also consider whether the payment is sustainable. Based on the last payment, Sichuan Energy Investment Development was quite comfortably earning enough to cover the dividend. This indicates that quite a large proportion of earnings is being invested back into the business.

Over the next year, EPS could expand by 8.5% if recent trends continue. If the dividend continues on this path, the payout ratio could be 45% by next year, which we think can be pretty sustainable going forward.

Sichuan Energy Investment Development's Dividend Has Lacked Consistency

Sichuan Energy Investment Development has been paying dividends for a while, but the track record isn't stellar. If the company cuts once, it definitely isn't argument against the possibility of it cutting in the future. The annual payment during the last 5 years was CN¥0.085 in 2019, and the most recent fiscal year payment was CN¥0.13. This implies that the company grew its distributions at a yearly rate of about 8.9% over that duration. A reasonable rate of dividend growth is good to see, but we're wary that the dividend history is not as solid as we'd like, having been cut at least once.

Sichuan Energy Investment Development Could Grow Its 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. Sichuan Energy Investment Development has impressed us by growing EPS at 8.5% per year over the past five years. The lack of cash flows does make us a bit cautious though, especially when it comes to the future of the dividend.

We Really Like Sichuan Energy Investment Development's Dividend

In summary, it is always positive to see the dividend being increased, and we are particularly pleased with its overall sustainability. Earnings are easily covering distributions, and the company is generating plenty of cash. Taking this all into consideration, this looks like it could be a good dividend opportunity.

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. For instance, we've picked out 1 warning sign for Sichuan Energy Investment Development that investors should take into consideration. 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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