Yangzijiang Shipbuilding (Holdings)'s (SGX:BS6) Dividend Will Be Increased To S$0.05

Yangzijiang Shipbuilding (Holdings) Ltd. (SGX:BS6) will increase its dividend on the 27th of May to S$0.05. This will take the dividend yield from 5.5% to 74%, providing a nice boost to shareholder returns.

View our latest analysis for Yangzijiang Shipbuilding (Holdings)

Yangzijiang Shipbuilding (Holdings)'s Payment Has Solid Earnings Coverage

A big dividend yield for a few years doesn't mean much if it can't be sustained. Before making this announcement, Yangzijiang Shipbuilding (Holdings) was easily earning enough to cover the dividend. This means that most of what the business earns is being used to help it grow.

Looking forward, earnings per share is forecast to fall by 1.2% over the next year. If the dividend continues along recent trends, we estimate the payout ratio could be 73%, which we consider to be quite comfortable, with most of the company's earnings left over to grow the business in the future.

Dividend Volatility

The company has a long dividend track record, but it doesn't look great with cuts in the past. Since 2012, the first annual payment was CN¥0.22, compared to the most recent full-year payment of CN¥0.24. Dividend payments have been growing, but very slowly over the period. The dividend has seen some fluctuations in the past, so even though the dividend was raised this year, we should remember that it has been cut in the past.

The Dividend Looks Likely To Grow

Growing earnings per share could be a mitigating factor when considering the past fluctuations in the dividend. Yangzijiang Shipbuilding (Holdings) has impressed us by growing EPS at 15% per year over the past five years. Yangzijiang Shipbuilding (Holdings) definitely has the potential to grow its dividend in the future with earnings on an uptrend and a low payout ratio.

We Really Like Yangzijiang Shipbuilding (Holdings)'s Dividend

Overall, we think this could be an attractive income stock, and it is only getting better by paying a higher dividend this year. The earnings easily cover the company's distributions, and the company is generating plenty of cash. We should point out that the earnings are expected to fall over the next 12 months, which won't be a problem if this doesn't become a trend, but could cause some turbulence in the next year. Taking this all into consideration, this looks like it could be a good dividend opportunity.

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. As an example, we've identified 3 warning signs for Yangzijiang Shipbuilding (Holdings) that you should be aware of before investing. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.

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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.