Chinney Kin Wing Holdings (HKG:1556) Has Announced A Dividend Of HK$0.015

Chinney Kin Wing Holdings Limited (HKG:1556) will pay a dividend of HK$0.015 on the 6th of July. This means the annual payment is 7.6% of the current stock price, which is above the average for the industry.

View our latest analysis for Chinney Kin Wing Holdings

Chinney Kin Wing Holdings' Payment Has Solid Earnings Coverage

A big dividend yield for a few years doesn't mean much if it can't be sustained. However, Chinney Kin Wing Holdings' earnings easily cover the dividend. This means that most of its earnings are being retained to grow the business.

Unless the company can turn things around, EPS could fall by 8.2% over the next year. Assuming the dividend continues along recent trends, we believe the payout ratio could be 27%, which we are pretty comfortable with and we think is feasible on an earnings basis.

Chinney Kin Wing Holdings' Dividend Has Lacked Consistency

Even in its relatively short history, the company has reduced the dividend at least once. This makes us cautious about the consistency of the dividend over a full economic cycle. Since 2017, the dividend has gone from HK$0.04 to HK$0.015. The dividend has fallen 63% over that period. Declining dividends isn't generally what we look for as they can indicate that the company is running into some challenges.

Dividend Growth May Be Hard To Come By

Given that dividend payments have been shrinking like a glacier in a warming world, we need to check if there are some bright spots on the horizon. In the last five years, Chinney Kin Wing Holdings' earnings per share has shrunk at approximately 8.2% per annum. A modest decline in earnings isn't great, and it makes it quite unlikely that the dividend will grow in the future unless that trend can be reversed.

Our Thoughts On Chinney Kin Wing Holdings' Dividend

In summary, while it's good to see that the dividend hasn't been cut, we are a bit cautious about Chinney Kin Wing Holdings' payments, as there could be some issues with sustaining them into the future. The company is generating plenty of cash, which could maintain the dividend for a while, but the track record hasn't been great. We would probably look elsewhere for an income investment.

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. To that end, Chinney Kin Wing Holdings has 4 warning signs (and 1 which doesn't sit too well with us) we think you should know about. Is Chinney Kin Wing Holdings not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

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