Regina Miracle International (Holdings) (HKG:2199) Is Due To Pay A Dividend Of HK$0.022

Regina Miracle International (Holdings) Limited (HKG:2199) will pay a dividend of HK$0.022 on the 2nd of October. Although the dividend is now higher, the yield is only 2.6%, which is below the industry average.

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

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

The dividend yield is a little bit low, but sustainability of the payments is also an important part of evaluating an income stock. Based on the last payment, Regina Miracle International (Holdings) was quite comfortably earning enough to cover the dividend. This means that a large portion of its earnings are being retained to grow the business.

Looking forward, earnings per share is forecast to rise by 162.2% over the next year. Assuming the dividend continues along recent trends, we think the payout ratio could be 17% by next year, which is in a pretty sustainable range.

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

Looking back, Regina Miracle International (Holdings)'s dividend hasn't been particularly consistent. Due to this, we are a little bit cautious about the dividend consistency over a full economic cycle. The annual payment during the last 8 years was HK$0.056 in 2016, and the most recent fiscal year payment was HK$0.057. Its dividends have grown at less than 1% per annum over this time frame. Modest growth in the dividend is good to see, but we think this is offset by historical cuts to the payments. It is hard to live on a dividend income if the company's earnings are not consistent.

Dividend Growth Potential Is Shaky

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. Regina Miracle International (Holdings)'s earnings per share has shrunk at 13% a year over the past five years. Such rapid declines definitely have the potential to constrain dividend payments if the trend continues into the future. However, the next year is actually looking up, with earnings set to rise. We would just wait until it becomes a pattern before getting too excited.

Our Thoughts On Regina Miracle International (Holdings)'s Dividend

In summary, while it's always good to see the dividend being raised, we don't think Regina Miracle International (Holdings)'s payments are rock solid. In the past, the payments have been unstable, but over the short term the dividend could be reliable, with the company generating enough cash to cover it. We would probably look elsewhere for an income investment.

It's important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. To that end, Regina Miracle International (Holdings) has 3 warning signs (and 1 which shouldn't be ignored) we think you should know about. Is Regina Miracle International (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.