Dividend Analysis: A Deep Dive into Hengan International Group Co Ltd's Dividend Performance
Examining the Past, Present, and Future Dividend Sustainability of Hengan International Group Co Ltd
Hengan International Group Co Ltd (HEGIY) recently announced a dividend of $0.49 per share, payable on 2023-10-27, with the ex-dividend date set for 2023-09-15. 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 Hengan International Group Co Ltd's dividend performance and assess its sustainability.
What Does Hengan International Group Co Ltd Do?
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Founded in 1985, Hengan International is a leading personal care product manufacturer in China. Its business comprises tissue paper products (54% of sales), sanitary napkins (27% of sales), disposable diapers (5% of sales), and others.
A Glimpse at Hengan International Group Co Ltd's Dividend History
Hengan International Group Co Ltd has maintained a consistent dividend payment record since 2018. Dividends are currently distributed on a bi-annually basis. Below is a chart showing annual Dividends Per Share for tracking historical trends.
Breaking Down Hengan International Group Co Ltd's Dividend Yield and Growth
As of today, Hengan International Group Co Ltd currently has a 12-month trailing dividend yield of 5.79% and a 12-month forward dividend yield of 5.62%. This suggests an expectation of decrease dividend payments over the next 12 months.
Over the past three years, Hengan International Group Co Ltd's annual dividend growth rate was -13.20%. Extended to a five-year horizon, this rate increased to -4.00% per year. And over the past decade, Hengan International Group Co Ltd's annual dividends per share growth rate stands at 3.70%.
Based on Hengan International Group Co Ltd's dividend yield and five-year growth rate, the 5-year yield on cost of Hengan International Group Co Ltd stock as of today is approximately 4.72%.
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, Hengan International Group Co Ltd's dividend payout ratio is 0.90. And this may suggest that the company's dividend may not be sustainable.
Hengan International Group Co Ltd's profitability rank, offers an understanding of the company's earnings prowess relative to its peers. GuruFocus ranks Hengan International Group Co Ltd's profitability 8 out of 10 as of 2023-06-30, suggesting good profitability prospects. 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. Hengan International Group Co Ltd's growth rank of 8 out of 10 suggests that the company's growth trajectory is good relative to its competitors.
Revenue is the lifeblood of any company, and Hengan International Group Co Ltd's revenue per share, combined with the 3-year revenue growth rate, indicates a strong revenue model. Hengan International Group Co Ltd's revenue has increased by approximately 1.10% per year on average, a rate that underperforms than approximately 69.46% of global competitors.
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, Hengan International Group Co Ltd's earnings increased by approximately -20.30% per year on average, a rate that underperforms than approximately 79.62% of global competitors.
Lastly, the company's 5-year EBITDA growth rate of -9.30%, which underperforms than approximately 80.17% of global competitors.
Next Steps
While Hengan International Group Co Ltd's consistent dividend payment record, strong profitability rank, and good growth rank are commendable, the sustainability of its dividends may be questioned due to its high payout ratio and underperforming growth rates compared to global competitors. Therefore, value investors should consider these factors before making investment decisions. Remember, a sustainable dividend is one that is supported by strong earnings and growth metrics.
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This article first appeared on GuruFocus.
