Hong Kong Ferry (Holdings) (HKG: 50) confirmed its dividend of HK $ 0.10
Hong Kong Ferry (Holdings) Company Limited (HKG: 50) announced that it will pay a dividend of HK $ 0.10 per share on September 28. Based on this payment, the dividend yield will be 4.4%, which is quite typical for the industry.
See our latest review for Hong Kong Ferry (Holdings)
Hong Kong Ferry (Holdings) pays more than it earns
We like a dividend to be consistent over the long term, so it’s important to check if it’s sustainable. Prior to this announcement, the company paid 335% of what it earned. It will be difficult to maintain this level of payment, so we would not be confident that this situation will continue.
Looking ahead, EPS could drop 33.4% if the company fails to raise the bar from the past few years. If the dividend continues according to recent trends, we estimate that the payout ratio could reach 500%, which could put the dividend at risk if the company’s earnings do not improve.
While the company has been paying a dividend for a long time, it has reduced the dividend at least once in the past 10 years. The dividend went from HK $ 0.36 in 2011 to the last annual payment of HK $ 0.25. The dividend has decreased by approximately 3.6% per year during this period. A business that decreases its dividend over time is usually not what we are looking for.
The dividend has limited growth potential
Growth in earnings per share could be a mitigating factor considering past dividend fluctuations. Hong Kong Ferry (Holdings) BPA has fallen by around 33% per year over the past five years. Such rapid declines certainly have the potential to restrict dividend payments if the trend continues in the future.
We are not big fans of the Hong Kong Ferry (Holdings) dividend
Overall, it is not a good candidate for an income investment, although the dividend has remained stable this year. The company seems to go the extra mile to make such large payments, but it doesn’t look like they can be consistent over time. All in all, this does not excite us very much from a revenue standpoint.
It is important to note that companies with a consistent dividend policy will generate greater investor confidence than those with an erratic policy. At the same time, there are other factors that our readers should be aware of before investing any capital in a stock. To this end, Hong Kong Ferry (Holdings) has 4 warning signs (and 1 which is a bit rude) we think you should be aware of. Looking for more high yield dividend ideas? Try our organized list of big dividend payers.
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