Crystal International Group (HKG:2232) Has Announced That It Will Be Increasing Its Dividend To $0.118

Crystal International Group Limited (HKG:2232) will increase its dividend from last year's comparable payment on the 7th of July to $0.118. This takes the dividend yield to 5.8%, which shareholders will be pleased with.

Check out our latest analysis for Crystal International Group

Crystal International Group Doesn't Earn Enough To Cover Its Payments

A big dividend yield for a few years doesn't mean much if it can't be sustained. However, Crystal International Group's earnings easily cover the dividend. This means that most of its earnings are being retained to grow the business.

Over the next year, EPS is forecast to expand by 26.5%. Assuming the dividend continues along recent trends, we think the payout ratio could reach 150%, which probably can't continue without putting some pressure on the balance sheet.

Crystal International Group's Dividend Has Lacked Consistency

Crystal International Group has been paying dividends for a while, but the track record isn't stellar. If the company cuts once, it definitely isn't argument against the possibility of it cutting in the future. The annual payment during the last 5 years was $0.016 in 2018, and the most recent fiscal year payment was $0.0214. This means that it has been growing its distributions at 6.0% per annum 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.

Dividend Growth May Be Hard To Achieve

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. However, Crystal International Group's EPS was effectively flat over the past five years, which could stop the company from paying more every year.

Our Thoughts On Crystal International Group's Dividend

In summary, while it's always good to see the dividend being raised, we don't think Crystal International Group's payments are rock solid. The payments haven't been particularly stable and we don't see huge growth potential, but with the dividend well covered by cash flows it could prove to be reliable over the short term. We would be a touch cautious of relying on this stock primarily for the dividend income.

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. For instance, we've picked out 1 warning sign for Crystal International Group that investors should take into consideration. Is Crystal International Group not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

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