SIIC Environment Holdings (SGX:BHK) Is Paying Out A Dividend Of CN¥0.01

SIIC Environment Holdings Ltd. (SGX:BHK) will pay a dividend of CN¥0.01 on the 31st of May. The dividend yield will be 7.6% based on this payment which is still above the industry average.

See 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. Based on the last payment, SIIC Environment Holdings was earning enough to cover the dividend, but free cash flows weren't positive. We think that cash flows should take priority over earnings, so this is definitely a worry for the dividend going forward.

If the trend of the last few years continues, EPS will grow by 7.1% over the next 12 months. Assuming the dividend continues along recent trends, we think the payout ratio could be 4.9% by next year, which is in a pretty sustainable range.

SIIC Environment Holdings' Dividend Has Lacked Consistency

Looking back, SIIC Environment Holdings' dividend hasn't been particularly consistent. This suggests that the dividend might not be the most reliable. The annual payment during the last 6 years was CN¥0.0473 in 2017, and the most recent fiscal year payment was CN¥0.0768. This means that it has been growing its distributions at 8.4% per annum over that time. It's good to see the dividend growing at a decent rate, but the dividend has been cut at least once in the past. SIIC Environment Holdings might have put its house in order since then, but we remain cautious.

We Could See SIIC Environment Holdings' Dividend Growing

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. SIIC Environment Holdings has impressed us by growing EPS at 7.1% per year over the past five years. A low payout ratio and decent growth suggests that the company is reinvesting well, and it also has plenty of room to increase the dividend over time.

Our Thoughts On SIIC Environment Holdings' Dividend

In summary, while it's good to see that the dividend hasn't been cut, we are a bit cautious about SIIC Environment Holdings' payments, as there could be some issues with sustaining them into the future. While the low payout ratio is a redeeming feature, this is offset by the minimal cash to cover the payments. We would probably look elsewhere for an income investment.

Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. However, there are other things to consider for investors when analysing stock performance. To that end, SIIC Environment Holdings has 2 warning signs (and 1 which can't be ignored) we think you should know about. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.

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