Is It Worth Considering Regina Miracle International (Holdings) Limited (HKG:2199) For Its Upcoming Dividend?

Some investors rely on dividends for growing their wealth, and if you're one of those dividend sleuths, you might be intrigued to know that Regina Miracle International (Holdings) Limited (HKG:2199) is about to go ex-dividend in just 4 days. Typically, the ex-dividend date is one business day before the record date which is the date on which a company determines the shareholders eligible to receive a dividend. The ex-dividend date is of consequence because whenever a stock is bought or sold, the trade takes at least two business day to settle. Meaning, you will need to purchase Regina Miracle International (Holdings)'s shares before the 11th of December to receive the dividend, which will be paid on the 22nd of December.

The company's next dividend payment will be HK$0.035 per share, on the back of last year when the company paid a total of HK$0.10 to shareholders. Last year's total dividend payments show that Regina Miracle International (Holdings) has a trailing yield of 4.7% on the current share price of HK$2.18. 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! As a result, readers should always check whether Regina Miracle International (Holdings) has been able to grow its dividends, or if the dividend might be cut.

See our latest analysis for Regina Miracle International (Holdings)

Dividends are typically paid from company earnings. If a company pays more in dividends than it earned in profit, then the dividend could be unsustainable. Regina Miracle International (Holdings) paid out a comfortable 37% of its profit last year. That said, even highly profitable companies sometimes might not generate enough cash to pay the dividend, which is why we should always check if the dividend is covered by cash flow. It paid out 18% of its free cash flow as dividends last year, which is conservatively low.

It's encouraging to see that the dividend is covered by both profit and cash flow. This generally suggests the dividend is sustainable, as long as earnings don't drop precipitously.

Click here to see the company's payout ratio, plus analyst estimates of its future dividends.

Have Earnings And Dividends Been Growing?

When earnings decline, dividend companies become much harder to analyse and own safely. If earnings fall far enough, the company could be forced to cut its dividend. With that in mind, we're discomforted by Regina Miracle International (Holdings)'s 5.9% per annum decline in earnings in the past five years. When earnings per share fall, the maximum amount of dividends that can be paid also falls.

Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. Regina Miracle International (Holdings) has delivered 9.1% dividend growth per year on average over the past seven years.

The Bottom Line

Should investors buy Regina Miracle International (Holdings) for the upcoming dividend? Regina Miracle International (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. Overall, it's hard to get excited about Regina Miracle International (Holdings) from a dividend perspective.

While it's tempting to invest in Regina Miracle International (Holdings) for the dividends alone, you should always be mindful of the risks involved. Every company has risks, and we've spotted 4 warning signs for Regina Miracle International (Holdings) (of which 1 can't be ignored!) you should know about.

A common investing mistake is buying the first interesting stock you see. Here you can find a full list of high-yield 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.