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

The board of Hong Kong Finance Group Limited (HKG:1273) has announced that it will pay a dividend of HK$0.013 per share on the 7th of October. Based on this payment, the dividend yield will be 6.9%, which is fairly typical for the industry.

View our latest analysis for Hong Kong Finance Group

Hong Kong Finance Group's Dividend Forecasted To Be Well Covered By Earnings

Unless the payments are sustainable, the dividend yield doesn't mean too much.

Hong Kong Finance Group has established itself as a dividend paying company, given its 8-year history of distributing earnings to shareholders. While past data isn't a guarantee for the future, Hong Kong Finance Group's latest earnings report puts its payout ratio at 15%, showing that the company can pay out its dividends comfortably.

Looking forward, earnings per share could rise by 8.8% over the next year if the trend from the last few years continues. If the dividend continues along recent trends, we estimate the future payout ratio will be 13%, which is in the range that makes us comfortable with the sustainability of the dividend.

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. Due to this, we are a little bit cautious about the dividend consistency over a full economic cycle. The dividend has gone from an annual total of HK$0.028 in 2014 to the most recent total annual payment of HK$0.026. Payments have been decreasing at a very slow pace in this time period. 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

Given that the dividend has been cut in the past, we need to check if earnings are growing and if that might lead to stronger dividends in the future. We are encouraged to see that Hong Kong Finance Group has grown earnings per share at 8.8% per year over the past five years. Growth in EPS bodes well for the dividend, as does the low payout ratio that the company is currently reporting.

We Really Like Hong Kong Finance Group's Dividend

Overall, we like to see the dividend staying consistent, and we think Hong Kong Finance Group might even raise payments in the future. The company is easily earning enough to cover its dividend payments and it is great to see that these earnings are being translated into cash flow. 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. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. For instance, we've picked out 2 warning signs for Hong Kong Finance Group that investors should take into consideration. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.

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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.