Hong Kong Finance Group (HKG:1273) Has Affirmed Its Dividend Of HK$0.013

Hong Kong Finance Group Limited's (HKG:1273) investors are due to receive a payment of HK$0.013 per share on 8th of October. This means the annual payment is 4.8% of the current stock price, which is above the average for the industry.

See our latest analysis for Hong Kong Finance Group

Hong Kong Finance Group's Earnings Easily Cover the Distributions

If the payments aren't sustainable, a high yield for a few years won't matter that much. However, Hong Kong Finance Group's earnings easily cover the dividend. As a result, a large proportion of what it earned was being reinvested back into the business.

Over the next year, EPS could expand by 8.8% if recent trends continue. If the dividend continues on this path, the payout ratio could be 12% by next year, which we think can be pretty sustainable going forward.

Hong Kong Finance Group's Dividend Has Lacked Consistency

It's comforting to see that Hong Kong Finance Group has been paying a dividend for a number of years now, however it has been cut at least once in that time. If the company cuts once, it definitely isn't argument against the possibility of it cutting in the future. Since 2014, the dividend has gone from HK$0.028 to HK$0.026. This works out to be a decline of approximately 1.1% per year over that time. Declining dividends isn't generally what we look for as they can indicate that the company is running into some challenges.

We Could See Hong Kong Finance Group's Dividend Growing

With a relatively unstable dividend, it's even more important to see if earnings per share is growing. Hong Kong Finance Group has impressed us by growing EPS at 8.8% per year over the past five years. A low payout ratio and decent growth suggests that the company is reinvesting well, and it also has plenty of room to increase the dividend over time.

We Really Like Hong Kong Finance Group's Dividend

Overall, we think that this is a great income investment, and we think that maintaining the dividend this year may have been a conservative choice. Distributions are quite easily covered by earnings, which are also being converted to cash flows. Taking this all into consideration, this looks like it could be a good dividend opportunity.

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 2 warning signs for Hong Kong Finance Group that investors should know about before committing capital to this stock. Looking for more high-yielding dividend ideas? Try our curated list of strong dividend payers.

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