An Analysis of BHKLY's Dividend History, Yield, Growth, and Sustainability
BOC Hong Kong Holdings Ltd (BHKLY, Financial) recently announced a dividend of $1.34 per share, payable on 2023-10-06, with the ex-dividend date set for 2023-09-14. 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 BOC Hong Kong Holdings Ltd's dividend performance and assess its sustainability.
What Does BOC Hong Kong Holdings Ltd Do?
Bank of China Hong Kong, or BOCHK, is a subsidiary of Bank of China. It is the second-largest bank in Hong Kong in terms of loan and deposit market shares. Although BOCHK is legally separate from Bank of China, it maintains close relationships with it in management, administration, and business relations. The two companies also cooperate in several areas, including the reselling of Bank of China's insurance and securities services. Bank of China holds a 66% stake in BOCHK.
A Glimpse at BOC Hong Kong Holdings Ltd's Dividend History
BOC Hong Kong Holdings Ltd has maintained a consistent dividend payment record since 2004. Dividends are currently distributed on a bi-annually basis. Below is a chart showing annual Dividends Per Share for tracking historical trends.
Breaking Down BOC Hong Kong Holdings Ltd's Dividend Yield and Growth
As of today, BOC Hong Kong Holdings Ltd currently has a 12-month trailing dividend yield of 6.09% and a 12-month forward dividend yield of 6.46%. This suggests an expectation of increased dividend payments over the next 12 months.
Over the past three years, BOC Hong Kong Holdings Ltd's annual dividend growth rate was -8.40%. Extended to a five-year horizon, this rate increased to -1.00% per year. And over the past decade, BOC Hong Kong Holdings Ltd's annual dividends per share growth rate stands at 1.70%.
Based on BOC Hong Kong Holdings Ltd's dividend yield and five-year growth rate, the 5-year yield on cost of BOC Hong Kong Holdings Ltd stock as of today is approximately 5.79%.
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, BOC Hong Kong Holdings Ltd's dividend payout ratio is 0.46.
BOC Hong Kong Holdings Ltd's profitability rank, offers an understanding of the company's earnings prowess relative to its peers. GuruFocus ranks BOC Hong Kong Holdings Ltd's profitability 5 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. BOC Hong Kong Holdings Ltd's growth rank of 5 out of 10 suggests that the company has a fair growth outlook.
Revenue is the lifeblood of any company, and BOC Hong Kong Holdings Ltd's revenue per share, combined with the 3-year revenue growth rate, indicates a strong revenue model. BOC Hong Kong Holdings Ltd's revenue has increased by approximately -4.20% per year on average, a rate that underperforms than approximately 90.41% 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, BOC Hong Kong Holdings Ltd's earnings increased by approximately -5.60% per year on average, a rate that underperforms than approximately 86.03% of global competitors.
Lastly, the company's 5-year EBITDA growth rate of -4.10%, which underperforms than approximately 85.97% of global competitors.
Next Steps
In conclusion, BOC Hong Kong Holdings Ltd's dividend payments, dividend growth rate, payout ratio, profitability, and growth metrics present a mixed picture. While the company has a consistent dividend payment history and a fair profitability rank, its negative growth rates and underperformance compared to global competitors raise concerns about the sustainability of its dividends in the long run. Thus, potential investors should take these factors into account when considering BOC Hong Kong Holdings Ltd as a potential dividend stock.
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