BII Railway Transportation Technology Holdings (HKG:1522) shareholders will receive a larger dividend than last year

The advice of BII Railway Transportation Technology Holdings Company Limited (HKG:1522) announced that it would increase its dividend by 8.0% on August 31 to HK$0.027. This will increase the annual payout from 7.0% to 7.0% of the share price, which is more than most companies in the industry pay.

See our latest analysis for BII Railway Transportation Technology Holdings

BII Railway Transportation Technology Holdings Earnings Easily Cover Distributions

If the payouts aren’t sustainable, a high return for a few years won’t matter much. However, prior to this announcement, BII Railway Transportation Technology Holdings’ dividend was comfortably covered by both cash flow and earnings. This means that most of what the business earns is used to help it grow.

Going forward, earnings per share could increase by 39.9% over the next year if the trend of recent years continues. Assuming the dividend continues on recent trends, we think the payout ratio could be 28% by next year, which is in a fairly sustainable range.

SEHK: 1522 Historic dividend April 28, 2022

Dividend volatility

The company’s dividend history has been marked by instability, with at least 1 cut in the past 10 years. Since 2012, the dividend has increased from HK$0.025 to HK$0.027. Dividend payouts increased by less than 1% per year during this period. It’s encouraging to see some dividend growth, but the dividend has been cut at least once, and the magnitude of the cut would eliminate most of the growth anyway, making it less attractive as a income investment.

The dividend should increase

With a relatively unstable dividend, it is even more important to see if earnings per share increase. It is encouraging to see that BII Railway Transportation Technology Holdings has increased its earnings per share by 40% per year over the past five years. Earnings per share are growing at a steady pace and the payout ratio is low, which we believe is an ideal combination in a dividend-paying stock, as the company can quite easily increase the dividend in the 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. Profits easily cover distributions and the company generates plenty of cash. Considering all of this, it looks like a good dividend opportunity.

Companies with a stable dividend policy are likely to enjoy greater investor interest than those that suffer from a more inconsistent approach. Meanwhile, despite the importance of dividend payments, these are not the only factors our readers should be aware of when evaluating a company. For example, we chose 1 warning sign for BII Railway Transportation Technology Holdings that investors should be aware of before committing capital to this security. Isn’t BII Railway Transportation Technology Holdings quite the opportunity you’ve been looking for? Why not check out our selection of the best dividend stocks.

This Simply Wall St article is general in nature. We provide commentary based on historical data and analyst forecasts only using unbiased methodology and our articles are not intended to be financial advice. It is not a recommendation to buy or sell stocks and does not take into account your objectives or financial situation. Our goal is to bring you targeted long-term analysis based on fundamental data. Note that our analysis may not take into account the latest announcements from price-sensitive companies or qualitative materials. Simply Wall St has no position in the stocks mentioned.

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