ManpowerGroup Greater China (HKG:2180) Has Announced A Dividend Of CN¥0.31

The board of ManpowerGroup Greater China Limited (HKG:2180) has announced that it will pay a dividend of CN¥0.31 per share on the 17th of July. This means the annual payment is 7.1% of the current stock price, which is above the average for the industry.

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ManpowerGroup Greater China's Future Dividend Projections Appear Well Covered By Earnings

Impressive dividend yields are good, but this doesn't matter much if the payments can't be sustained. Prior to this announcement, ManpowerGroup Greater China was quite comfortably covering its dividend with earnings and it was paying more than 75% of its free cash flow to shareholders. The company is clearly earning enough to pay this type of dividend, but it is definitely focused on returning cash to shareholders, rather than growing the business.

If the trend of the last few years continues, EPS will grow by 0.1% over the next 12 months. Assuming the dividend continues along recent trends, we think the payout ratio could be 52% by next year, which is in a pretty sustainable range.

View our latest analysis for ManpowerGroup Greater China

ManpowerGroup Greater China's Dividend Has Lacked Consistency

ManpowerGroup Greater China has been paying dividends for a while, but the track record isn't stellar. Due to this, we are a little bit cautious about the dividend consistency over a full economic cycle. Since 2020, the annual payment back then was CN¥0.224, compared to the most recent full-year payment of CN¥0.29. This means that it has been growing its distributions at 5.3% per annum over that time. We have seen cuts in the past, so while the growth looks promising we would be a little bit cautious about its track record.

ManpowerGroup Greater China May Find It Hard To Grow The Dividend

With a relatively unstable dividend, it's even more important to see if earnings per share is growing. ManpowerGroup Greater China hasn't seen much change in its earnings per share over the last five years. Growth of 0.1% may indicate that the company has limited investment opportunity so it is returning its earnings to shareholders instead. This isn't bad in itself, but unless earnings growth pick up we wouldn't expect dividends to grow either.

In Summary

In summary, while it's good to see that the dividend hasn't been cut, we are a bit cautious about ManpowerGroup Greater China's payments, as there could be some issues with sustaining them into the future. The company hasn't been paying a very consistent dividend over time, despite only paying out a small portion of earnings. Overall, we don't think this company has the makings of a good income stock.

Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. As an example, we've identified 1 warning sign for ManpowerGroup Greater China 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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