Harbin Bank Co., Ltd. (HKG:6138) is about to trade ex-dividend in the next 4 days. You can purchase shares before the 20th of May in order to receive the dividend, which the company will pay on the 15th of July.
Harbin Bank's upcoming dividend is HK$0.10 a share, following on from the last 12 months, when the company distributed a total of HK$0.10 per share to shareholders. Looking at the last 12 months of distributions, Harbin Bank has a trailing yield of approximately 8.6% on its current stock price of HK$1.27. Dividends are an important source of income to many shareholders, but the health of the business is crucial to maintaining those dividends. So we need to investigate whether Harbin Bank can afford its dividend, and if the dividend could grow.
If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. That's why it's good to see Harbin Bank paying out a modest 31% of its earnings.
When a company paid out less in dividends than it earned in profit, this generally suggests its dividend is affordable. The lower the % of its profit that it pays out, the greater the margin of safety for the dividend if the business enters a downturn.
Have Earnings And Dividends Been Growing?
Companies with falling earnings are riskier for dividend shareholders. Investors love dividends, so if earnings fall and the dividend is reduced, expect a stock to be sold off heavily at the same time. That's why it's not ideal to see Harbin Bank's earnings per share have been shrinking at 2.6% a year over the previous five years.
Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. Harbin Bank has seen its dividend decline 0.6% per annum on average over the past five years, which is not great to see.
The Bottom Line
Is Harbin Bank an attractive dividend stock, or better left on the shelf? Harbin Bank's earnings per share are down over the past five years, although it has the cushion of a low payout ratio, which would suggest a cut to the dividend is relatively unlikely. In sum this is a middling combination, and we find it hard to get excited about the company from a dividend perspective.
If you want to look further into Harbin Bank, it's worth knowing the risks this business faces. To help with this, we've discovered 2 warning signs for Harbin Bank (1 is a bit unpleasant!) that you ought to be aware of before buying the shares.
If you're in the market for dividend stocks, we recommend checking our list of top dividend stocks with a greater than 2% yield and an upcoming dividend.
If you spot an error that warrants correction, please contact the editor at email@example.com. 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. Simply Wall St has no position in the stocks mentioned.
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