BII Railway Transportation Technology Holdings (HKG: 1522) increases dividend to HK $ 0.025

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BII Railway Transportation Technology Holdings Company Limited (HKG: 1522) the dividend will increase to HK $ 0.025 on August 31. This will bring the dividend yield from 5.8% to 5.8%, which will give shareholders returns a big boost.

While the dividend yield is important for income investors, it is also important to take into account any significant change in the price of the shares, as this will generally outweigh any gains from distributions. The BII Railway Transportation Technology Holdings share price has fallen 36% in the past 3 months, which is not ideal for investors and may explain a sharp increase in dividend yield.

Check out our latest review for BII Railway Transportation Technology Holdings

BII Railway Transportation Technology Holdings’ Profits Easily Cover Distributions

Impressive dividend yields are good, but it doesn’t matter much if the payouts can’t be sustained. Prior to making this announcement, BII Railway Transportation Technology Holdings was easily earning enough to cover the dividend. This means that most of its profits are kept to grow the business.

Over the next year, EPS could increase by 36.9% if recent trends continue. Assuming the dividend continues on recent trends, we think the payout ratio could be 23% by next year, which is in a fairly sustainable range.

SEHK: 1522 Historic dividend May 28, 2021

BII Railway Transportation Technology Holdings dividend lacks consistency

Looking back, the dividend for BII Railway Transportation Technology Holdings has not been particularly consistent. This suggests that the dividend might not be the most reliable. The most recent annual payment of HK $ 0.025 is roughly the same as the first annual payment 9 years ago. It’s good to see modest dividend growth, but we believe this is offset by historic reductions in payments. It is difficult to live on dividend income if the company’s profits are not consistent.

The dividend seems likely to increase

Growth in earnings per share could be a mitigating factor considering past dividend fluctuations. It is encouraging to see that BII Railway Transportation Technology Holdings has increased its earnings per share by 37% per year over the past five years. Rapid earnings growth and a low payout ratio suggest that this company has indeed reinvested in its business. If this continues, this business could have a bright future.

BII Railway Transportation Technology Holdings Looks Like a Great Dividend

Overall, we think it could be an attractive income stock, and it’s only getting better by paying a higher dividend this year. The company easily earns enough to cover its dividend payments and it’s great to see that those profits translate into cash flow. All of these factors taken into account, we believe this has strong potential as a dividend-paying stock.

Market movements testify to the high value of a coherent dividend policy compared to a more unpredictable one. Meanwhile, despite the importance of dividend payments, they aren’t the only factors our readers should be aware of when valuing a business. Taking the debate a step further, we identified 3 warning signs for BII Railway Transportation Technology Holdings that investors need to be aware of moving forward. Looking for more high yield dividend ideas? Try our organized list of big dividend payers.

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This Simply Wall St article is general in nature. It does not constitute a recommendation to buy or sell shares and does not take into account your goals or your financial situation. Our aim is to bring you long-term, targeted analysis based on fundamental data. Note that our analysis may not take into account the latest announcements from price sensitive companies or qualitative documents. Simply Wall St has no position in the mentioned stocks.
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