As global markets navigate through volatility and economic uncertainties, the Hong Kong market has shown resilience with the Hang Seng Index posting a modest gain. In this environment, dividend stocks can offer a stable income stream, making them an attractive option for investors seeking reliability amidst market fluctuations. When selecting dividend stocks, it's crucial to consider companies with strong fundamentals and consistent payout histories. This article will spotlight three such stocks listed on the SEHK: China Shenhua Energy and two more noteworthy contenders.
Overview: China Shenhua Energy Company Limited, with a market cap of HK$837.09 billion, operates in the production and sale of coal and power as well as railway, port, and shipping transportation businesses both in China and internationally.
Operations: China Shenhua Energy Company Limited's revenue segments (in millions of CN¥) are as follows: Coal: 273.67 billion, Power: 93.61 billion, Railway: 43.62 billion, Port: 6.84 billion, Shipping: 4.92 billion, and Coal Chemical: 6.08 billion.
Dividend Yield: 7.3%
China Shenhua Energy's dividend payments are covered by earnings (payout ratio: 79.1%) and cash flows (cash payout ratio: 87%). However, the dividends have been volatile over the past decade, with occasional drops exceeding 20%, making them unreliable. Recent news includes a final ordinary dividend of RMB 2.26 per share for FY2023 and a reported decrease in first-half profits for 2024 by up to 13.8%.
Overview: PC Partner Group Limited, with a market cap of HK$1.68 billion, is an investment holding company that designs, develops, manufactures, and sells computer electronics.
Operations: The company's revenue segment primarily consists of HK$9.17 billion from the design, manufacturing, and trading of electronics and PC parts and accessories.
Dividend Yield: 9.2%
PC Partner Group's recent earnings guidance indicates a significant improvement, with expected net profit rising to HK$150 million for the first half of 2024 from HK$20 million in the same period last year. Despite this, the company's dividend payments remain volatile and unreliable over the past decade. The high payout ratio (191.2%) suggests dividends are not well covered by earnings, although they are supported by cash flows due to a low cash payout ratio (4.4%).
Overview: Bank of Communications Co., Ltd. offers commercial banking products and services in China, with a market cap of HK$533.31 billion.
Operations: Bank of Communications Co., Ltd.'s revenue segments include Personal Banking (CN¥81.71 billion), Treasury Business (CN¥20.99 billion), and Corporate Banking Business (CN¥97.35 billion).
Dividend Yield: 6.9%
Bank of Communications offers a stable dividend, having consistently increased payments over the past decade. The current payout ratio of 32.7% indicates dividends are well covered by earnings, with forecasts suggesting continued coverage at 31.2%. Recent news includes a final dividend distribution of RMB 0.375 per share for 2023 and the completion of an CNY 800 million fixed-income offering, which may support financial stability and future payouts.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
Companies discussed in this article include SEHK:1088 SEHK:1263 and SEHK:3328.
