Regina Miracle International (Holdings) (HKG:2199) Has Announced That Its Dividend Will Be Reduced To HK$0.018

Regina Miracle International (Holdings) Limited (HKG:2199) is reducing its dividend from last year's comparable payment to HK$0.018 on the 4th of October. This means the annual payment is 3.9% of the current stock price, which is above the average for the industry.

Check out our latest analysis for Regina Miracle International (Holdings)

Regina Miracle International (Holdings)'s Payment Has Solid Earnings Coverage

A big dividend yield for a few years doesn't mean much if it can't be sustained. Before making this announcement, Regina Miracle International (Holdings) was easily earning enough to cover the dividend. This means that most of what the business earns is being used to help it grow.

Over the next year, EPS is forecast to expand by 74.1%. Assuming the dividend continues along recent trends, we think the payout ratio could be 18% by next year, which is in a pretty sustainable range.

Regina Miracle International (Holdings)'s Dividend Has Lacked Consistency

Regina Miracle International (Holdings) has been paying dividends for a while, but the track record isn't stellar. This makes us cautious about the consistency of the dividend over a full economic cycle. Since 2016, the dividend has gone from HK$0.056 total annually to HK$0.103. This works out to be a compound annual growth rate (CAGR) of approximately 9.1% a year 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.

Regina Miracle International (Holdings) Could Grow Its Dividend

Growing earnings per share could be a mitigating factor when considering the past fluctuations in the dividend. Regina Miracle International (Holdings) has impressed us by growing EPS at 9.8% per year over the past five years. A low payout ratio and decent growth suggests that the company is reinvesting well, and it also has plenty of room to increase the dividend over time.

We Really Like Regina Miracle International (Holdings)'s Dividend

It is generally not great to see the dividend being cut, but we don't think this should happen much if at all in the future given that Regina Miracle International (Holdings) has the makings of a solid income stock moving forward. Reducing the amount it is paying as a dividend can protect the company's balance sheet, keeping the dividend sustainable for longer. All of these factors considered, we think this has solid potential as a dividend stock.

Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. However, there are other things to consider for investors when analysing stock performance. Just as an example, we've come across 2 warning signs for Regina Miracle International (Holdings) you should be aware of, and 1 of them doesn't sit too well with us. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.

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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.