SIIC Environment Holdings (SGX:BHK) Is Paying Out A Dividend Of CN¥0.005

SIIC Environment Holdings Ltd. (SGX:BHK) will pay a dividend of CN¥0.005 on the 28th of September. This means the annual payment is 6.9% of the current stock price, which is above the average for the industry.

View our latest analysis for SIIC Environment Holdings

SIIC Environment Holdings' Earnings Easily Cover The Distributions

A big dividend yield for a few years doesn't mean much if it can't be sustained. SIIC Environment Holdings is quite easily earning enough to cover the dividend, however it is being let down by weak cash flows. In general, we consider cash flow to be more important than earnings, so we would be cautious about relying on the sustainability of this dividend.

Over the next year, EPS could expand by 7.8% if recent trends continue. Assuming the dividend continues along recent trends, we think the payout ratio could be 4.8% 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. Since 2017, the dividend has gone from CN¥0.0473 total annually to CN¥0.0762. This implies that the company grew its distributions at a yearly rate of about 8.3% over that duration. 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.

SIIC Environment Holdings 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. SIIC Environment Holdings has seen EPS rising for the last five years, at 7.8% per annum. Growth in EPS bodes well for the dividend, as does the low payout ratio that the company is currently reporting.

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 be a touch cautious of relying on this stock primarily for the dividend income.

Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. Case in point: We've spotted 2 warning signs for SIIC Environment Holdings (of which 1 makes us a bit uncomfortable!) you should know about. Is SIIC Environment Holdings not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

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