Public Financial Holdings Limited (HKG:626) Goes Ex-Dividend Soon

Public Financial Holdings Limited (HKG:626) stock is about to trade ex-dividend in 4 days. You can purchase shares before the 25th of January in order to receive the dividend, which the company will pay on the 26th of February.

Public Financial Holdings's next dividend payment will be HK$0.12 per share, on the back of last year when the company paid a total of HK$0.15 to shareholders. Last year's total dividend payments show that Public Financial Holdings has a trailing yield of 6.9% on the current share price of HK$2.18. We love seeing companies pay a dividend, but it's also important to be sure that laying the golden eggs isn't going to kill our golden goose! So we need to check whether the dividend payments are covered, and if earnings are growing.

View our latest analysis for Public Financial Holdings

If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. Fortunately Public Financial Holdings's payout ratio is modest, at just 41% of profit.

When a company paid out less in dividends than it earned in profit, this generally suggests its dividend is affordable. The lower the % of its profit that it pays out, the greater the margin of safety for the dividend if the business enters a downturn.

Click here to see how much of its profit Public Financial Holdings paid out over the last 12 months.

Have Earnings And Dividends Been Growing?

Stocks with flat earnings can still be attractive dividend payers, but it is important to be more conservative with your approach and demand a greater margin for safety when it comes to dividend sustainability. Investors love dividends, so if earnings fall and the dividend is reduced, expect a stock to be sold off heavily at the same time. With that in mind, we're not enthused to see that Public Financial Holdings's earnings per share have remained effectively flat over the past five years. Better than seeing them fall off a cliff, for sure, but the best dividend stocks grow their earnings meaningfully over the long run.

Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. Public Financial Holdings's dividend payments per share have declined at 3.3% per year on average over the past 10 years, which is uninspiring.

Final Takeaway

From a dividend perspective, should investors buy or avoid Public Financial Holdings? Public Financial Holdings's earnings per share have not grown at all in recent years, although we like that it is paying out a low percentage of its earnings. It doesn't appear an outstanding opportunity, but could be worth a closer look.

With that being said, if dividends aren't your biggest concern with Public Financial Holdings, you should know about the other risks facing this business. For example, we've found 1 warning sign for Public Financial Holdings that we recommend you consider before investing in the business.

If you're in the market for dividend stocks, we recommend checking our list of top dividend stocks with a greater than 2% yield and an upcoming dividend.

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This article by Simply Wall St is general in nature. 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.
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