SIIC Environment Holdings (SGX:BHK) Is Due To Pay A Dividend Of CN¥0.006

SIIC Environment Holdings Ltd.'s (SGX:BHK) investors are due to receive a payment of CN¥0.006 per share on 31st of May. This means the annual payment is 6.7% of the current stock price, which is above the average for the industry.

View our latest analysis for SIIC Environment Holdings

SIIC Environment Holdings' Dividend Is Well Covered By Earnings

A big dividend yield for a few years doesn't mean much if it can't be sustained. However, prior to this announcement, SIIC Environment Holdings' dividend was comfortably covered by both cash flow and earnings. This means that most of what the business earns is being used to help it grow.

Looking forward, earnings per share could rise by 2.5% 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 4.8% by next year, which we think can be pretty sustainable going forward.

SIIC Environment Holdings' Dividend Has Lacked Consistency

SIIC Environment 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. The dividend has gone from an annual total of CN¥0.0473 in 2017 to the most recent total annual payment of CN¥0.0583. This means that it has been growing its distributions at 3.0% per annum over that time. We're glad to see the dividend has risen, but with a limited rate of growth and fluctuations in the payments the total shareholder return may be limited.

Dividend Growth May Be Hard To Achieve

Growing earnings per share could be a mitigating factor when considering the past fluctuations in the dividend. Earnings has been rising at 2.5% per annum over the last five years, which admittedly is a bit slow. Earnings growth is slow, but on the plus side, the dividend payout ratio is low and dividends could grow faster than earnings, if the company decides to increase its payout ratio.

In Summary

Even though the dividend was cut this year, we think SIIC Environment Holdings has the ability to make consistent payments in the future. The dividend has been at reasonable levels historically, but that hasn't translated into a consistent payment. Taking all of this into consideration, the dividend looks viable moving forward, but investors should be mindful that the company has pushed the boundaries of sustainability in the past and may do so again.

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. Just as an example, we've come across 2 warning signs for SIIC Environment Holdings you should be aware of, and 1 of them is concerning. 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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