Yuexiu Transport Infrastructure Limited (HKG:1052) Looks Like A Good Stock, And It's Going Ex-Dividend Soon
Yuexiu Transport Infrastructure Limited (HKG:1052) stock is about to trade ex-dividend in 4 days time. Investors can purchase shares before the 1st of June in order to be eligible for this dividend, which will be paid on the 29th of June.
Yuexiu Transport Infrastructure's next dividend payment will be HK$0.21 per share. Last year, in total, the company distributed HK$0.35 to shareholders. Based on the last year's worth of payments, Yuexiu Transport Infrastructure has a trailing yield of 7.4% on the current stock price of HK$5.15. Dividends are a major contributor to investment returns for long term holders, but only if the dividend continues to be paid. As a result, readers should always check whether Yuexiu Transport Infrastructure has been able to grow its dividends, or if the dividend might be cut.
See our latest analysis for Yuexiu Transport Infrastructure
Dividends are typically paid from company earnings. If a company pays more in dividends than it earned in profit, then the dividend could be unsustainable. Yuexiu Transport Infrastructure is paying out an acceptable 51% of its profit, a common payout level among most companies. Yet cash flow is typically more important than profit for assessing dividend sustainability, so we should always check if the company generated enough cash to afford its dividend. It distributed 31% of its free cash flow as dividends, a comfortable payout level for most companies.
It's positive to see that Yuexiu Transport Infrastructure's dividend is covered by both profits and cash flow, since this is generally a sign that the dividend is sustainable, and a lower payout ratio usually suggests a greater margin of safety before the dividend gets cut.
Click here to see the company's payout ratio, plus analyst estimates of its future dividends.
Have Earnings And Dividends Been Growing?
Companies with consistently growing earnings per share generally make the best dividend stocks, as they usually find it easier to grow dividends per share. Investors love dividends, so if earnings fall and the dividend is reduced, expect a stock to be sold off heavily at the same time. For this reason, we're glad to see Yuexiu Transport Infrastructure's earnings per share have risen 13% per annum over the last five years. Yuexiu Transport Infrastructure is paying out a bit over half its earnings, which suggests the company is striking a balance between reinvesting in growth, and paying dividends. This is a reasonable combination that could hint at some further dividend increases in the future.
The main way most investors will assess a company's dividend prospects is by checking the historical rate of dividend growth. In the past ten years, Yuexiu Transport Infrastructure has increased its dividend at approximately 13% a year on average. Both per-share earnings and dividends have both been growing rapidly in recent times, which is great to see.
Final Takeaway
Has Yuexiu Transport Infrastructure got what it takes to maintain its dividend payments? We like Yuexiu Transport Infrastructure's growing earnings per share and the fact that - while its payout ratio is around average - it paid out a lower percentage of its cash flow. Yuexiu Transport Infrastructure looks solid on this analysis overall, and we'd definitely consider investigating it more closely.
In light of that, while Yuexiu Transport Infrastructure has an appealing dividend, it's worth knowing the risks involved with this stock. For example, we've found 2 warning signs for Yuexiu Transport Infrastructure (1 is significant!) that deserve your attention before investing in the shares.
We wouldn't recommend just buying the first dividend stock you see, though. Here's a list of interesting dividend stocks with a greater than 2% yield and an upcoming dividend.
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This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned. Thank you for reading.
