Assessing the Sustainability of SIHBY's Dividend Payments
Shenzhen Investment Holdings Bay Area Development Co Ltd (SIHBY, Financial) recently announced a dividend of $0.08 per share, payable on 2023-11-17, with the ex-dividend date set for 2023-09-21. As investors look forward to this upcoming payment, the spotlight also shines on the company's dividend history, yield, and growth rates. Using the data from GuruFocus, let's deep dive into Shenzhen Investment Holdings Bay Area Development Co Ltd's dividend performance and assess its sustainability.
Company Overview: Shenzhen Investment Holdings Bay Area Development Co Ltd
Shenzhen Investment Holdings Bay Area Development Co Ltd is an investment holding company that is engaged in the initiation, promotion, development, and operation of toll expressways and bridges in China. The company manages its business in four segments namely Guangzhou-Shenzhen Superhighway, Guangzhou-Zhuhai West Superhighway, Coastal Expressway, and Xintang Interchange. It generates most of the revenue from the Guangzhou-Shenzhen Superhighway segment.
Shenzhen Investment Holdings Bay Area Development Co Ltd's Dividend History
Shenzhen Investment Holdings Bay Area Development Co Ltd has maintained a consistent dividend payment record since 2013. Dividends are currently distributed on a bi-annually basis. Below is a chart showing annual Dividends Per Share for tracking historical trends.
Shenzhen Investment Holdings Bay Area Development Co Ltd's Dividend Yield and Growth
As of today, Shenzhen Investment Holdings Bay Area Development Co Ltd currently has a 12-month trailing dividend yield of 7.59% and a 12-month forward dividend yield of 7.14%. This suggests an expectation of decrease dividend payments over the next 12 months.
Over the past three years, Shenzhen Investment Holdings Bay Area Development Co Ltd's annual dividend growth rate was -5.60%. Extended to a five-year horizon, this rate increased to 1.70% per year. And over the past decade, Shenzhen Investment Holdings Bay Area Development Co Ltd's annual dividends per share growth rate stands at -5.60%.
Based on Shenzhen Investment Holdings Bay Area Development Co Ltd's dividend yield and five-year growth rate, the 5-year yield on cost of Shenzhen Investment Holdings Bay Area Development Co Ltd stock as of today is approximately 8.26%.
The Sustainability Question: Payout Ratio and Profitability
To assess the sustainability of the dividend, one needs to evaluate the company's payout ratio. The dividend payout ratio provides insights into the portion of earnings the company distributes as dividends. A lower ratio suggests that the company retains a significant part of its earnings, thereby ensuring the availability of funds for future growth and unexpected downturns. As of 2023-06-30, Shenzhen Investment Holdings Bay Area Development Co Ltd's dividend payout ratio is 1.15. This may suggest that the company's dividend may not be sustainable.
Shenzhen Investment Holdings Bay Area Development Co Ltd's profitability rank, offers an understanding of the company's earnings prowess relative to its peers. GuruFocus ranks Shenzhen Investment Holdings Bay Area Development Co Ltd's profitability 6 out of 10 as of 2023-06-30, suggesting fair profitability. The company has reported positive net income for each of year over the past decade, further solidifying its high profitability.
Growth Metrics: The Future Outlook
To ensure the sustainability of dividends, a company must have robust growth metrics. Shenzhen Investment Holdings Bay Area Development Co Ltd's growth rank of 6 out of 10 suggests that the company has a fair growth outlook.
The company's 3-year EPS growth rate showcases its capability to grow its earnings, a critical component for sustaining dividends in the long run. During the past three years, Shenzhen Investment Holdings Bay Area Development Co Ltd's earnings increased by approximately -23.00% per year on average, a rate that outperforms than approximately 18.37% of global competitors.
Lastly, the company's 5-year EBITDA growth rate of -10.00%, which outperforms than approximately 20.95% of global competitors.
Conclusion
In conclusion, while Shenzhen Investment Holdings Bay Area Development Co Ltd's dividend yield and growth rate are appealing, the company's high payout ratio raises concerns about the sustainability of its dividends. However, the company's fair profitability and growth outlook suggest potential for future earnings growth. Therefore, investors should carefully monitor the company's earnings growth and payout ratio when considering its dividend prospects.
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