Hong Kong Exchanges and Clearing Ltd's Dividend Analysis
Investigating the Dividend Profile of HKXCY
Hong Kong Exchanges and Clearing Ltd (HKXCY) recently announced a dividend of $0.5 per share, payable on 2024-04-11, with the ex-dividend date set for 2024-03-13. 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 look into Hong Kong Exchanges and Clearing Ltd's dividend performance and assess its sustainability.
What Does Hong Kong Exchanges and Clearing Ltd Do?
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Hong Kong Exchanges and Clearing is a vertically integrated securities exchange business offering listing, data, trading, clearing, and settlement services across equities, debt, and derivatives. HKEx, like Hong Kong itself, functions as a gateway between China and the rest of the world. HKEx serves as a preferred listing venue for Chinese companies outside of China and, through the Connect Scheme, offers two-way trading for a growing group of financial products with the Shanghai Stock Exchange and the Shenzhen Stock Exchange.
A Glimpse at Hong Kong Exchanges and Clearing Ltd's Dividend History
Hong Kong Exchanges and Clearing Ltd has maintained a consistent dividend payment record since 2009. Dividends are currently distributed on a bi-annually basis. Below is a chart showing annual Dividends Per Share for tracking historical trends.
Breaking Down Hong Kong Exchanges and Clearing Ltd's Dividend Yield and Growth
As of today, Hong Kong Exchanges and Clearing Ltd currently has a 12-month trailing dividend yield of 3.38% and a 12-month forward dividend yield of 3.47%. This suggests an expectation of increased dividend payments over the next 12 months.
Over the past three years, Hong Kong Exchanges and Clearing Ltd's annual dividend growth rate was 6.90%. Extended to a five-year horizon, this rate decreased to 5.40% per year. And over the past decade, Hong Kong Exchanges and Clearing Ltd's annual dividends per share growth rate stands at 9.80%.
Based on Hong Kong Exchanges and Clearing Ltd's dividend yield and five-year growth rate, the 5-year yield on cost of Hong Kong Exchanges and Clearing Ltd stock as of today is approximately 4.40%.
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 2023-12-31, Hong Kong Exchanges and Clearing Ltd's dividend payout ratio is 0.74, which may suggest that the company's dividend may not be sustainable.
Hong Kong Exchanges and Clearing Ltd's profitability rank, offers an understanding of the company's earnings prowess relative to its peers. GuruFocus ranks Hong Kong Exchanges and Clearing Ltd's profitability 8 out of 10 as of 2023-12-31, 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. Hong Kong Exchanges and Clearing 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 Hong Kong Exchanges and Clearing Ltd's revenue per share, combined with the 3-year revenue growth rate, indicates a strong revenue model. Hong Kong Exchanges and Clearing Ltd's revenue has increased by approximately -2.90% per year on average, a rate that underperforms approximately 68.93% 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, Hong Kong Exchanges and Clearing Ltd's earnings increased by approximately 2.00% per year on average, a rate that underperforms approximately 62.26% of global competitors.
Lastly, the company's 5-year EBITDA growth rate of 4.70%, which underperforms approximately 67.47% of global competitors.
Next Steps
In conclusion, while Hong Kong Exchanges and Clearing Ltd's dividend payments and growth rate are noteworthy, the sustainability of these dividends is a complex question. The company's moderate payout ratio and strong profitability rank indicate a capacity to continue its dividend payments. However, growth metrics such as revenue, EPS, and EBITDA growth rates suggest that Hong Kong Exchanges and Clearing Ltd may face challenges outperforming its global competitors. Investors should consider these factors in conjunction with their investment strategy and risk tolerance. For those seeking to expand their portfolio with high-dividend yield stocks, GuruFocus Premium users can utilize the High Dividend Yield Screener for further research and investment opportunities.
This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circumstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein.
This article first appeared on GuruFocus.
