Crystal International Group (HKG:2232) Is Increasing Its Dividend To $0.118

The board of Crystal International Group Limited (HKG:2232) has announced that it will be paying its dividend of $0.118 on the 7th of July, an increased payment from last year's comparable dividend. This makes the dividend yield 6.4%, which is above the industry average.

See our latest analysis for Crystal International Group

Crystal International Group Is Paying Out More Than It Is Earning

We like to see robust dividend yields, but that doesn't matter if the payment isn't sustainable. However, Crystal International Group's earnings easily cover the dividend. As a result, a large proportion of what it earned was being reinvested back into the business.

Earnings per share is forecast to rise by 29.8% over the next year. Assuming the dividend continues along recent trends, we think the payout ratio could reach 171%, which probably can't continue without putting some pressure on the balance sheet.

Crystal International Group's Dividend Has Lacked Consistency

It's comforting to see that Crystal International Group has been paying a dividend for a number of years now, however it has been cut at least once in that time. This suggests that the dividend might not be the most reliable. Since 2018, the dividend has gone from $0.016 total annually to $0.0214. This implies that the company grew its distributions at a yearly rate of about 6.0% over that duration. It's good to see the dividend growing at a decent rate, but the dividend has been cut at least once in the past. Crystal International Group might have put its house in order since then, but we remain cautious.

Crystal International Group May Find It Hard To Grow The Dividend

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. Crystal International Group hasn't seen much change in its earnings per share over the last five years.

In Summary

Overall, this is probably not a great income stock, even though the dividend is being raised at the moment. The company is generating plenty of cash, which could maintain the dividend for a while, but the track record hasn't been great. We don't think Crystal International Group is a great stock to add to your portfolio if income is your focus.

Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. As an example, we've identified 1 warning sign for Crystal International Group that you should be aware of before investing. If you are a dividend investor, you might also want to look at our curated 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.