Sun Hing Printing Holdings (HKG:1975) Is Paying Out Less In Dividends Than Last Year

Sun Hing Printing Holdings Limited (HKG:1975) is reducing its dividend from last year's comparable payment to HK$0.043 on the 20th of December. The dividend yield will be in the average range for the industry at 8.2%.

Check out our latest analysis for Sun Hing Printing Holdings

Sun Hing Printing Holdings' Dividend Is Well Covered By Earnings

Unless the payments are sustainable, the dividend yield doesn't mean too much. The last dividend was quite easily covered by Sun Hing Printing Holdings' earnings. This means that a large portion of its earnings are being retained to grow the business.

Looking forward, earnings per share could rise by 50.7% over the next year if the trend from the last few years continues. If the dividend continues along recent trends, we estimate the payout ratio will be 32%, which is in the range that makes us comfortable with the sustainability of the dividend.

Sun Hing Printing Holdings' Dividend Has Lacked Consistency

It's comforting to see that Sun Hing Printing Holdings has been paying a dividend for a number of years now, however it has been cut at least once in that time. This suggests that the dividend might not be the most reliable. The dividend has gone from an annual total of HK$0.03 in 2018 to the most recent total annual payment of HK$0.065. This means that it has been growing its distributions at 17% per annum over that time. Sun Hing Printing Holdings has grown distributions at a rapid rate despite cutting the dividend at least once in the past. Companies that cut once often cut again, so we would be cautious about buying this stock solely for the dividend income.

The Dividend Looks Likely To Grow

Given that the dividend has been cut in the past, we need to check if earnings are growing and if that might lead to stronger dividends in the future. Sun Hing Printing Holdings has impressed us by growing EPS at 51% per year over the past five years. The company doesn't have any problems growing, despite returning a lot of capital to shareholders, which is a very nice combination for a dividend stock to have.

We Really Like Sun Hing Printing Holdings' Dividend

In general, we don't like to see the dividend being cut, especially when the company has such high potential like Sun Hing Printing Holdings does. Reducing the amount it is paying as a dividend can protect the company's balance sheet, keeping the dividend sustainable for longer. All in all, this checks a lot of the boxes we look for when choosing an income stock.

It's important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. For instance, we've picked out 2 warning signs for Sun Hing Printing Holdings that investors should take into consideration. Is Sun Hing Printing Holdings not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

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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.