Grand Ming Group Holdings (HKG:1271) Has Announced A Dividend Of HK$0.04

Grand Ming Group Holdings Limited (HKG:1271) has announced that it will pay a dividend of HK$0.04 per share on the 2nd of September. Including this payment, the dividend yield on the stock will be 3.6%, which is a modest boost for shareholders' returns.

View our latest analysis for Grand Ming Group Holdings

Grand Ming Group Holdings Doesn't Earn Enough To Cover Its Payments

It would be nice for the yield to be higher, but we should also check if higher levels of dividend payment would be sustainable. Before this announcement, Grand Ming Group Holdings was paying out 647% of what it was earning, and not generating any free cash flows either. This high of a dividend payment could start to put pressure on the balance sheet in the future.

If the company can't turn things around, EPS could fall by 38.7% over the next year. If the dividend continues along the path it has been on recently, the payout ratio in 12 months could be 4,270%, which is definitely a bit high to be sustainable going forward.

Grand Ming Group Holdings' Dividend Has Lacked Consistency

Looking back, Grand Ming Group Holdings' dividend hasn't been particularly consistent. Due to this, we are a little bit cautious about the dividend consistency over a full economic cycle. Since 2013, the annual payment back then was HK$0.0203, compared to the most recent full-year payment of HK$0.28. This means that it has been growing its distributions at 34% per annum over that time. Dividends have grown rapidly over this time, but with cuts in the past we are not certain that this stock will be a reliable source of income in the future.

The Dividend Has Limited Growth Potential

Growing earnings per share could be a mitigating factor when considering the past fluctuations in the dividend. Over the past five years, it looks as though Grand Ming Group Holdings' EPS has declined at around 39% a year. Such rapid declines definitely have the potential to constrain dividend payments if the trend continues into the future.

We're Not Big Fans Of Grand Ming Group Holdings' Dividend

Overall, this isn't a great candidate as an income investment, even though the dividend was stable this year. The company isn't making enough to be paying as much as it is, and the other factors don't look particularly promising either. We don't think that this is a great candidate to be an income stock.

Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. Case in point: We've spotted 5 warning signs for Grand Ming Group Holdings (of which 3 shouldn't be ignored!) you should know about. 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.