Tianjin Port Development Holdings Limited's (HKG:3382) dividend is being reduced from last year's payment covering the same period to HK$0.0448 on the 21st of July. This means that the annual payment will be 6.7% of the current stock price, which is in line with the average for the industry.
Tianjin Port Development Holdings' Projected Earnings Seem Likely To Cover Future Distributions
Solid dividend yields are great, but they only really help us if the payment is sustainable. Before making this announcement, Tianjin Port Development Holdings was easily earning enough to cover the dividend. This means that most of its earnings are being retained to grow the business.
If the trend of the last few years continues, EPS will grow by 12.2% over the next 12 months. Assuming the dividend continues along recent trends, we think the payout ratio could be 35% by next year, which is in a pretty sustainable range.
Check out our latest analysis for Tianjin Port Development Holdings
Dividend Volatility
Although the company has a long dividend history, it has been cut at least once in the last 10 years. The annual payment during the last 10 years was HK$0.0526 in 2015, and the most recent fiscal year payment was HK$0.0448. Doing the maths, this is a decline of about 1.6% per year. Generally, we don't like to see a dividend that has been declining over time as this can degrade shareholders' returns and indicate that the company may be running into problems.
The Dividend Looks Likely To Grow
Growing earnings per share could be a mitigating factor when considering the past fluctuations in the dividend. Tianjin Port Development Holdings has seen EPS rising for the last five years, at 12% per annum. Tianjin Port Development 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 Tianjin Port Development Holdings' Dividend
In general, we don't like to see the dividend being cut, especially when the company has such high potential like Tianjin Port Development Holdings does. Reducing the amount it is paying as a dividend can protect the company's balance sheet, keeping the dividend sustainable for longer. 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. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. For instance, we've picked out 1 warning sign for Tianjin Port Development Holdings that investors should take into consideration. 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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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.