Crystal International Group (HKG:2232) Is Paying Out A Larger Dividend Than Last Year

Crystal International Group Limited's (HKG:2232) dividend will be increasing from last year's payment of the same period to $0.13 on 5th of July. This takes the dividend yield to 4.4%, which shareholders will be pleased with.

While the dividend yield is important for income investors, it is also important to consider any large share price moves, as this will generally outweigh any gains from distributions. Investors will be pleased to see that Crystal International Group's stock price has increased by 36% in the last 3 months, which is good for shareholders and can also explain a decrease in the dividend yield.

See our latest analysis for Crystal International Group

Crystal International Group Is Paying Out More Than It Is Earning

If the payments aren't sustainable, a high yield for a few years won't matter that much. Prior to this announcement, Crystal International Group's dividend was comfortably covered by both cash flow and earnings. This means that a large portion of its earnings are being retained to grow the business.

Earnings per share is forecast to rise by 45.2% over the next year. If the dividend continues on its recent course, the payout ratio in 12 months could be 185%, which is a bit high and could start applying pressure to the balance sheet.

Crystal International Group's Dividend Has Lacked Consistency

Looking back, Crystal International Group'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. Since 2018, the annual payment back then was $0.016, compared to the most recent full-year payment of $0.023. This works out to be a compound annual growth rate (CAGR) of approximately 6.2% 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.

Dividend Growth May Be Hard To Achieve

With a relatively unstable dividend, it's even more important to see if earnings per share is growing. Crystal International Group hasn't seen much change in its earnings per share over the last five years. The company has been growing at a pretty soft 1.8% per annum, and is paying out quite a lot of its earnings to shareholders. While this isn't necessarily a negative, it definitely signals that dividend growth could be constrained in the future unless earnings start to pick up again.

Our Thoughts On Crystal International Group's Dividend

Overall, it's great to see the dividend being raised and that it is still in a sustainable range. The dividend has been at reasonable levels historically, but that hasn't translated into a consistent payment. Taking all of this into consideration, the dividend looks viable moving forward, but investors should be mindful that the company has pushed the boundaries of sustainability in the past and may do so again.

Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. For example, we've picked out 1 warning sign for Crystal International Group that investors should know about before committing capital to this stock. 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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