CR Construction Group Holdings (HKG:1582) Will Pay A Dividend Of HK$0.025

The board of CR Construction Group Holdings Limited (HKG:1582) has announced that it will pay a dividend on the 30th of September, with investors receiving HK$0.025 per share. The dividend yield will be 8.8% based on this payment which is still above the industry average.

See our latest analysis for CR Construction Group Holdings

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

We like to see robust dividend yields, but that doesn't matter if the payment isn't sustainable. Prior to this announcement, CR Construction Group Holdings' earnings easily covered the dividend, but free cash flows were negative. With the company not bringing in any cash, paying out to shareholders is bound to become difficult at some point.

If the company can't turn things around, EPS could fall by 91.0% over the next year. If the dividend continues along the path it has been on recently, the payout ratio in 12 months could be 291%, which is definitely a bit high to be sustainable going forward.

CR Construction Group Holdings Doesn't Have A Long Payment History

Without a track record of dividend payments, we can't make a judgement on how stable it has been. This doesn't mean that the company can't pay a good dividend, but just that we want to wait until it can prove itself.

The Dividend Has Limited Growth Potential

Some investors will be chomping at the bit to buy some of the company's stock based on its dividend history. However, things aren't all that rosy. Earnings per share has been sinking by 91% over the last three years. Dividend payments are likely to come under some pressure unless EPS can pull out of the nosedive it is in.

CR Construction Group Holdings' Dividend Doesn't Look Sustainable

In summary, while it's good to see that the dividend hasn't been cut, we are a bit cautious about CR Construction Group Holdings' payments, as there could be some issues with sustaining them into the future. With cash flows lacking, it is difficult to see how the company can sustain a dividend payment. This company is not in the top tier of income providing stocks.

It's important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. Taking the debate a bit further, we've identified 2 warning signs for CR Construction Group Holdings that investors need to be conscious of moving forward. If you are a dividend investor, you might also want to look at our curated list of high performing dividend stock.

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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.
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