Shanghai Industrial Urban Development Group’s (HKG:563) next dividend will be higher than last year

Shanghai Industrial Urban Development Group Limited (HKG:563) announced that it will increase its dividend on June 24 to HK$0.045, which is 4.7% more than last year. This makes the dividend yield about the same as the industry average at 6.3%.

Check out our latest analysis for Shanghai Industrial Urban Development Group

Shanghai Industrial Urban Development Group’s payment has strong profit coverage

Unless the payouts are sustainable, the dividend yield doesn’t mean much. However, prior to this announcement, Shanghai Industrial Urban Development Group’s dividend was comfortably covered by both cash flow and earnings. This means most of his income is kept to grow the business.

Going forward, earnings per share could increase by 1.9% over the next year if the trend of recent years continues. If the dividend continues on this path, the payout ratio could be 41% by next year, which we believe can be quite sustainable going forward.

SEHK:563 Historic Dividend March 30, 2022

Shanghai industrial urban development group is still building its balance sheet

Shanghai Industrial Urban Development Group’s dividend has been fairly stable for a little while now, but we will continue to be cautious until this is demonstrated for a few more years. Since 2015, the first annual payment was HK$0.011, compared to HK$0.043 for the last annual payment. This means that it increased its distributions by 22% per year during this period. The dividend has been rising rapidly, but with such a short payout history, we can’t know for sure if the payout can continue to rise over the long term, so caution may be warranted.

Shanghai industrial urban development group may struggle to raise dividend

Some investors will be eager to buy some of the company’s stock based on its dividend history. Although it’s important to note that Shanghai Industrial Urban Development Group’s earnings per share have barely increased from five years ago, which could erode the purchasing power of the dividend over time. Earnings growth is slow, but on the positive side, the dividend payout ratio is low and dividends could grow faster than earnings, if the company decides to increase its payout ratio.

In summary

In summary, it’s great to see that the company can increase the dividend and keep it within a sustainable range. 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 cautious.

It is important to note that companies with a consistent dividend policy will generate greater investor confidence than those with an erratic policy. Meanwhile, despite the importance of dividend payments, these are not the only factors our readers should be aware of when evaluating a company. Example: we have identified 4 warning signs for Shanghai Industrial Urban Development Group (1 of which is a little worrying!) that you should know about. Looking for more high yield dividend ideas? Try our collection of strong dividend payers.

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.

Sara H. Byrd