Beijing Enterprises Holdings (HKG:392) Will Pay A Larger Dividend Than Last Year At HK$1.10

Beijing Enterprises Holdings Limited's (HKG:392) dividend will be increasing from last year's payment of the same period to HK$1.10 on 24th of July. This will take the annual payment to 5.7% of the stock price, which is above what most companies in the industry pay.

See our latest analysis for Beijing Enterprises Holdings

Beijing Enterprises Holdings' Payment Has Solid Earnings Coverage

A big dividend yield for a few years doesn't mean much if it can't be sustained. However, Beijing Enterprises Holdings' earnings easily cover the dividend. As a result, a large proportion of what it earned was being reinvested back into the business.

Looking forward, earnings per share is forecast to rise by 51.1% over the next year. If the dividend continues on this path, the payout ratio could be 19% by next year, which we think can be pretty sustainable going forward.

Beijing Enterprises Holdings Has A Solid Track Record

The company has an extended history of paying stable dividends. Since 2013, the dividend has gone from HK$0.75 total annually to HK$1.60. This works out to be a compound annual growth rate (CAGR) of approximately 7.9% a year over that time. The dividend has been growing very nicely for a number of years, and has given its shareholders some nice income in their portfolios.

The Dividend's Growth Prospects Are Limited

Some investors will be chomping at the bit to buy some of the company's stock based on its dividend history. However, Beijing Enterprises Holdings' EPS was effectively flat over the past five years, which could stop the company from paying more every year. While growth may be thin on the ground, Beijing Enterprises Holdings could always pay out a higher proportion of earnings to increase shareholder returns.

Beijing Enterprises Holdings Looks Like A Great Dividend Stock

Overall, we think this could be an attractive income stock, and it is only getting better by paying a higher dividend this year. The company is easily earning enough to cover its dividend payments and it is great to see that these earnings are being translated into cash flow. All of these factors considered, we think this has solid potential as a dividend stock.

Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. To that end, Beijing Enterprises Holdings has 2 warning signs (and 1 which is concerning) we think you should know about. Is Beijing Enterprises Holdings not quite the opportunity you were looking for? Why not check out our selection of top 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.