Tianjin Port Development Holdings Limited (HKG:3382) has announced that on 21st of July, it will be paying a dividend ofHK$0.0448, which a reduction from last year's comparable dividend. Despite the cut, the dividend yield of 7.2% will still be comparable to other companies in the industry.
Tianjin Port Development Holdings' Payment Could Potentially Have Solid Earnings Coverage
Unless the payments are sustainable, the dividend yield doesn't mean too much. 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.
Over the next year, EPS could expand by 12.2% if recent trends continue. If the dividend continues on this path, the payout ratio could be 35% by next year, which we think can be pretty sustainable going forward.
See 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$0.0532 in 2015, and the most recent fiscal year payment was HK$0.0448. Doing the maths, this is a decline of about 1.7% per year. Declining dividends isn't generally what we look for as they can indicate that the company is running into some challenges.
The Dividend Looks Likely To Grow
Growing earnings per share could be a mitigating factor when considering the past fluctuations in the dividend. We are encouraged to see that Tianjin Port Development Holdings has grown earnings per share at 12% per year over the past five years. Growth in EPS bodes well for the dividend, as does the low payout ratio that the company is currently reporting.
Tianjin Port Development Holdings Looks Like A Great Dividend Stock
It is generally not great to see the dividend being cut, but we don't think this should happen much if at all in the future given that Tianjin Port Development Holdings has the makings of a solid income stock moving forward. By reducing the dividend, pressure will be taken off the balance sheet, which could help the dividend to be consistent in the future. Taking this all into consideration, this looks like it could be a good dividend opportunity.
It's important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. As an example, we've identified 1 warning sign for Tianjin Port Development Holdings that you should be aware of before investing. Is Tianjin Port Development Holdings not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.
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