Regina Miracle International (Holdings)'s (HKG:2199) Dividend Will Be HK$0.022

Regina Miracle International (Holdings) Limited's (HKG:2199) investors are due to receive a payment of HK$0.022 per share on 2nd of October. Despite this raise, the dividend yield of 2.4% is only a modest boost to shareholder returns.

View our latest analysis for Regina Miracle International (Holdings)

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

It would be nice for the yield to be higher, but we should also check if higher levels of dividend payment would be sustainable. The last dividend was quite easily covered by Regina Miracle International (Holdings)'s earnings. This means that a large portion of its earnings are being retained to grow the business.

According to analysts, EPS should be several times higher next year. If the dividend continues along recent trends, we estimate the payout ratio will be 15%, so there isn't too much pressure on the dividend.

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

Looking back, Regina Miracle International (Holdings)'s dividend hasn't been particularly consistent. This makes us cautious about the consistency of the dividend over a full economic cycle. The dividend has gone from an annual total of HK$0.056 in 2016 to the most recent total annual payment of HK$0.057. Its dividends have grown at less than 1% per annum over this time frame. The dividend has seen some fluctuations in the past, so even though the dividend was raised this year, we should remember that it has been cut in the past.

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. Over the past five years, it looks as though Regina Miracle International (Holdings)'s EPS has declined at around 13% a year. 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.

In Summary

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. The company is generating plenty of cash, which could maintain the dividend for a while, but the track record hasn't been great. We would probably look elsewhere for an income investment.

Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. 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 is concerning) 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.

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