Stock Analysis

Intron Technology Holdings (HKG:1760) Is Paying Out A Larger Dividend Than Last Year

SEHK:1760
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Intron Technology Holdings Limited's (HKG:1760) dividend will be increasing to HK$0.068 on 4th of July. This makes the dividend yield 4.0%, which is above the industry average.

See our latest analysis for Intron Technology Holdings

Intron Technology Holdings' Dividend Is Well Covered By Earnings

We like to see robust dividend yields, but that doesn't matter if the payment isn't sustainable. Prior to this announcement, Intron Technology Holdings' earnings easily covered the dividend, but free cash flows were negative. In general, we consider cash flow to be more important than earnings, so we would be cautious about relying on the sustainability of this dividend.

Over the next year, EPS is forecast to expand by 13.0%. Assuming the dividend continues along recent trends, we think the payout ratio could be 65% by next year, which is in a pretty sustainable range.

historic-dividend
SEHK:1760 Historic Dividend May 31st 2022

Intron Technology Holdings' Dividend Has Lacked Consistency

The track record isn't the longest, but we are already seeing a bit of instability in the payments. Since 2019, the dividend has gone from CN¥0.047 to CN¥0.056. This implies that the company grew its distributions at a yearly rate of about 6.0% over that duration. We like to see dividends have grown at a reasonable rate, but with at least one substantial cut in the payments, we're not certain this dividend stock would be ideal for someone intending to live on the income.

Dividend Growth May Be Hard To Achieve

Growing earnings per share could be a mitigating factor when considering the past fluctuations in the dividend. However, Intron Technology Holdings' EPS was effectively flat over the past three years, which could stop the company from paying more every year. While EPS growth is quite low, Intron Technology Holdings has the option to increase the payout ratio to return more cash to shareholders.

Our Thoughts On Intron Technology Holdings' Dividend

In summary, while it's always good to see the dividend being raised, we don't think Intron Technology Holdings' payments are rock solid. While the low payout ratio is redeeming feature, this is offset by the minimal cash to cover the payments. We don't think Intron Technology Holdings is a great stock to add to your portfolio if income is your focus.

Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. However, there are other things to consider for investors when analysing stock performance. For example, we've picked out 1 warning sign for Intron Technology Holdings that investors should know about before committing capital to this stock. If you are a dividend investor, you might also want to look at our curated list of high yield dividend stocks.

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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.