IWS Group Holdings' (HKG:6663) Dividend Is Being Reduced To HK$0.015

IWS Group Holdings Limited's (HKG:6663) dividend is being reduced from last year's payment covering the same period to HK$0.015 on the 16th of October. This means that the dividend yield is 3.9%, which is a bit low when comparing to other companies in the industry.

View our latest analysis for IWS Group Holdings

IWS Group Holdings' Earnings Easily Cover The Distributions

If it is predictable over a long period, even low dividend yields can be attractive. Based on the last payment, IWS Group Holdings was quite comfortably earning enough to cover the dividend. This indicates that a lot of the earnings are being reinvested into the business, with the aim of fueling growth.

Over the next year, EPS could expand by 4.3% if recent trends continue. If the dividend continues on this path, the payout ratio could be 65% by next year, which we think can be pretty sustainable going forward.

IWS Group Holdings' Dividend Has Lacked Consistency

Looking back, the company hasn't been paying the most consistent dividend, but with such a short dividend history it could be too early to draw solid conclusions. The dividend has gone from an annual total of HK$0.02 in 2020 to the most recent total annual payment of HK$0.015. This works out to be a decline of approximately 9.1% per year over that time. A company that decreases its dividend over time generally isn't what we are looking for.

IWS Group Holdings May Find It Hard To Grow The Dividend

With a relatively unstable dividend, and a poor history of shrinking dividends, it's even more important to see if EPS is growing. However, IWS Group Holdings has only grown its earnings per share at 4.3% per annum over the past five years. The company has been growing at a pretty soft 4.3% per annum, and is paying out quite a lot of its earnings to shareholders. This could mean the dividend doesn't have the growth potential we look for going into the future.

Our Thoughts On IWS Group Holdings' Dividend

Even though the dividend was cut this year, we think IWS Group Holdings has the ability to make consistent payments in the future. The payout ratio looks good, but unfortunately the company's dividend track record isn't stellar. This looks like it could be a good dividend stock going forward, but we would note that the payout ratio has been at higher levels in the past so it could happen again.

It's important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. However, there are other things to consider for investors when analysing stock performance. Taking the debate a bit further, we've identified 3 warning signs for IWS Group Holdings that investors need to be conscious of moving forward. Is IWS Group 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.