CITIC's (HKG:267) Dividend Will Be CN¥0.2193
CITIC Limited (HKG:267) will pay a dividend of CN¥0.2193 on the 21st of November. This takes the annual payment to 5.3% of the current stock price, which unfortunately is below what the industry is paying.
CITIC's Future Dividend Projections Appear Well Covered By Earnings
The dividend yield is a little bit low, but sustainability of the payments is also an important part of evaluating an income stock. Prior to this announcement, CITIC's earnings easily covered the dividend, but free cash flows were negative. We think that cash flows should take priority over earnings, so this is definitely a worry for the dividend going forward.
The next year is set to see EPS grow by 25.2%. Assuming the dividend continues along recent trends, we think the payout ratio could be 27% by next year, which is in a pretty sustainable range.
Check out our latest analysis for CITIC
CITIC Has A Solid Track Record
The company has been paying a dividend for a long time, and it has been quite stable which gives us confidence in the future dividend potential. The annual payment during the last 10 years was CN¥0.172 in 2015, and the most recent fiscal year payment was CN¥0.55. This implies that the company grew its distributions at a yearly rate of about 12% over that duration. We can see that payments have shown some very nice upward momentum without faltering, which provides some reassurance that future payments will also be reliable.
We Could See CITIC's Dividend Growing
Some investors will be chomping at the bit to buy some of the company's stock based on its dividend history. It's encouraging to see that CITIC has been growing its earnings per share at 5.8% a year over the past five years. CITIC definitely has the potential to grow its dividend in the future with earnings on an uptrend and a low payout ratio.
Our Thoughts On CITIC's Dividend
In summary, while it's always good to see the dividend being raised, we don't think CITIC's payments are rock solid. While the low payout ratio is a redeeming feature, this is offset by the minimal cash to cover the payments. Overall, we don't think this company has the makings of a good income stock.
Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. For instance, we've picked out 1 warning sign for CITIC that investors should take into consideration. If you are a dividend investor, you might also want to look at our curated list of high yield dividend stocks.
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