Leeport (Holdings)'s (HKG:387) Upcoming Dividend Will Be Larger Than Last Year's

Leeport (Holdings) Limited's (HKG:387) dividend will be increasing from last year's payment of the same period to HK$0.135 on 31st of July. This takes the annual payment to 5.4% of the current stock price, which unfortunately is below what the industry is paying.

Check out our latest analysis for Leeport (Holdings)

Leeport (Holdings) Doesn't Earn Enough To Cover Its Payments

If it is predictable over a long period, even low dividend yields can be attractive. Before this announcement, Leeport (Holdings) was paying out 92% of earnings, but a comparatively small 11% of free cash flows. In general, cash flows are more important than earnings, so we are comfortable that the dividend will be sustainable going forward, especially with so much cash left over for reinvestment.

If the company can't turn things around, EPS could fall by 10.1% over the next year. If the dividend continues along the path it has been on recently, the payout ratio in 12 months could be 313%, which is definitely a bit high to be sustainable going forward.

Dividend Volatility

While the company has been paying a dividend for a long time, it has cut the dividend at least once in the last 10 years. The annual payment during the last 10 years was HK$0.015 in 2014, and the most recent fiscal year payment was HK$0.045. This implies that the company grew its distributions at a yearly rate of about 12% over that duration. 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

With a relatively unstable dividend, it's even more important to see if earnings per share is growing. Leeport (Holdings)'s earnings per share has shrunk at 10% a year over the past five years. Such rapid declines definitely have the potential to constrain dividend payments if the trend continues into the future.

Our Thoughts On Leeport (Holdings)'s Dividend

In summary, while it's always good to see the dividend being raised, we don't think Leeport (Holdings)'s payments are rock solid. 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 be a touch cautious of relying on this stock primarily for the dividend income.

Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. However, there are other things to consider for investors when analysing stock performance. For example, we've picked out 3 warning signs for Leeport (Holdings) that investors should know about before committing capital to this stock. Is Leeport (Holdings) not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com