Income Investors Should Know That Sun Hing Printing Holdings Limited (HKG:1975) Goes Ex-Dividend Soon

Regular readers will know that we love our dividends at Simply Wall St, which is why it's exciting to see Sun Hing Printing Holdings Limited (HKG:1975) is about to trade ex-dividend in the next 3 days. This means that investors who purchase shares on or after the 3rd of December will not receive the dividend, which will be paid on the 21st of December.

Sun Hing Printing Holdings's next dividend payment will be HK$0.035 per share, and in the last 12 months, the company paid a total of HK$0.045 per share. Looking at the last 12 months of distributions, Sun Hing Printing Holdings has a trailing yield of approximately 7.9% on its current stock price of HK$0.57. We love seeing companies pay a dividend, but it's also important to be sure that laying the golden eggs isn't going to kill our golden goose! We need to see whether the dividend is covered by earnings and if it's growing.

See our latest analysis for Sun Hing Printing Holdings

Dividends are typically paid out of company income, so if a company pays out more than it earned, its dividend is usually at a higher risk of being cut. Fortunately Sun Hing Printing Holdings's payout ratio is modest, at just 48% of profit. Yet cash flow is typically more important than profit for assessing dividend sustainability, so we should always check if the company generated enough cash to afford its dividend. Fortunately, it paid out only 32% of its free cash flow in the past year.

It's positive to see that Sun Hing Printing Holdings's dividend is covered by both profits and cash flow, since this is generally a sign that the dividend is sustainable, and a lower payout ratio usually suggests a greater margin of safety before the dividend gets cut.

Click here to see how much of its profit Sun Hing Printing Holdings paid out over the last 12 months.

Have Earnings And Dividends Been Growing?

When earnings decline, dividend companies become much harder to analyse and own safely. Investors love dividends, so if earnings fall and the dividend is reduced, expect a stock to be sold off heavily at the same time. That's why it's not ideal to see Sun Hing Printing Holdings's earnings per share have been shrinking at 2.9% a year over the previous three years.

The main way most investors will assess a company's dividend prospects is by checking the historical rate of dividend growth. In the past two years, Sun Hing Printing Holdings has increased its dividend at approximately 22% a year on average.

Final Takeaway

Is Sun Hing Printing Holdings an attractive dividend stock, or better left on the shelf? Sun Hing Printing Holdings has comfortably low cash and profit payout ratios, which may mean the dividend is sustainable even in the face of a sharp decline in earnings per share. Still, we consider declining earnings to be a warning sign. It might be worth researching if the company is reinvesting in growth projects that could grow earnings and dividends in the future, but for now we're not all that optimistic on its dividend prospects.

While it's tempting to invest in Sun Hing Printing Holdings for the dividends alone, you should always be mindful of the risks involved. In terms of investment risks, we've identified 3 warning signs with Sun Hing Printing Holdings and understanding them should be part of your investment process.

A common investment mistake is buying the first interesting stock you see. Here you can find a list of promising dividend stocks with a greater than 2% yield and an upcoming dividend.

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This article by Simply Wall St is general in nature. 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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