Maike Tube Industry Holdings Limited (HKG:1553) will pay a dividend of CN¥0.12 on the 9th of July. This makes the dividend yield 8.6%, which will augment investor returns quite nicely.
Our free stock report includes 1 warning sign investors should be aware of before investing in Maike Tube Industry Holdings. Read for free now.Maike Tube Industry Holdings' Payment Could Potentially Have Solid Earnings Coverage
While it is great to have a strong dividend yield, we should also consider whether the payment is sustainable. However, Maike Tube Industry Holdings' earnings easily cover the dividend. This means that most of what the business earns is being used to help it grow.
Over the next year, EPS could expand by 4.3% if recent trends continue. If the dividend continues along recent trends, we estimate the payout ratio will be 36%, which is in the range that makes us comfortable with the sustainability of the dividend.
Check out our latest analysis for Maike Tube Industry Holdings
Maike Tube Industry Holdings Is Still Building Its Track Record
The dividend hasn't seen any major cuts in the past, but the company has only been paying a dividend for 4 years, which isn't that long in the grand scheme of things. Since 2021, the dividend has gone from CN¥0.1 total annually to CN¥0.111. This implies that the company grew its distributions at a yearly rate of about 2.6% over that duration. It's good to see at least some dividend growth. Yet with a relatively short dividend paying history, we wouldn't want to depend on this dividend too heavily.
The Dividend's Growth Prospects Are Limited
Some investors will be chomping at the bit to buy some of the company's stock based on its dividend history. Earnings has been rising at 4.3% per annum over the last five years, which admittedly is a bit slow. While EPS growth is quite low, Maike Tube Industry Holdings has the option to increase the payout ratio to return more cash to shareholders.
Our Thoughts On Maike Tube Industry Holdings' Dividend
Overall, a consistent dividend is a good thing, and we think that Maike Tube Industry Holdings has the ability to continue this into the future. The payout ratio looks good, but unfortunately the company's dividend track record isn't stellar. The dividend looks okay, but there have been some issues in the past, so we would be a little bit cautious.
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. Taking the debate a bit further, we've identified 1 warning sign for Maike Tube Industry Holdings that investors need to be conscious of moving forward. Is Maike Tube Industry Holdings not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.
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