CR Construction Group Holdings' (HKG:1582) Dividend Will Be HK$0.018

The board of CR Construction Group Holdings Limited (HKG:1582) has announced that it will pay a dividend of HK$0.018 per share on the 28th of July. This means the annual payment is 9.5% of the current stock price, which is above the average for the industry.

Check out our latest analysis for CR Construction Group Holdings

CR Construction Group Holdings Is Paying Out More Than It Is Earning

While it is great to have a strong dividend yield, we should also consider whether the payment is sustainable. Before making this announcement, CR Construction Group Holdings was easily earning enough to cover the dividend. This means that most of what the business earns is being used to help it grow.

If the company can't turn things around, EPS could fall by 79.0% over the next year. If the dividend continues along the path it has been on recently, the payout ratio in 12 months could be 181%, which is definitely a bit high to be sustainable going forward.

CR Construction Group Holdings' Dividend Has Lacked Consistency

The track record isn't the longest, but we are already seeing a bit of instability in the payments. Since 2020, the annual payment back then was HK$0.05, compared to the most recent full-year payment of HK$0.043. The dividend has shrunk at around 4.9% a year during that period. A company that decreases its dividend over time generally isn't what we are looking for.

Dividend Growth Potential Is Shaky

With a relatively unstable dividend, it's even more important to evaluate if earnings per share is growing, which could point to a growing dividend in the future. CR Construction Group Holdings' earnings per share has shrunk at 79% a year over the past five years. This steep decline can indicate that the business is going through a tough time, which could constrain its ability to pay a larger dividend each year in the future.

In Summary

Overall, it's nice to see a consistent dividend payment, but we think that longer term, the current level of payment might be unsustainable. The company is generating plenty of cash, which could maintain the dividend for a while, but the track record hasn't been great. We don't think CR Construction Group Holdings is a great stock to add to your portfolio if income is your focus.

Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. For example, we've identified 3 warning signs for CR Construction Group Holdings (1 shouldn't be ignored!) that you should be aware of before investing. 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.