Kingdom Holdings' (HKG:528) Dividend Will Be Increased To CN¥0.09

The board of Kingdom Holdings Limited (HKG:528) has announced that it will be paying its dividend of CN¥0.09 on the 14th of July, an increased payment from last year's comparable dividend. This will take the dividend yield to an attractive 6.7%, providing a nice boost to shareholder returns.

View our latest analysis for Kingdom Holdings

Kingdom Holdings' Earnings Easily Cover The Distributions

Impressive dividend yields are good, but this doesn't matter much if the payments can't be sustained. However, Kingdom Holdings' earnings easily cover the dividend. This means that most of what the business earns is being used to help it grow.

Looking forward, earnings per share could rise by 16.1% over the next year if the trend from the last few years continues. Assuming the dividend continues along recent trends, we think the payout ratio could be 27% by next year, which is in a pretty sustainable range.

Dividend Volatility

Although the company has a long dividend history, it has been cut at least once in the last 10 years. The annual payment during the last 10 years was CN¥0.0545 in 2013, and the most recent fiscal year payment was CN¥0.0787. This works out to be a compound annual growth rate (CAGR) of approximately 3.7% a year over that time. It's encouraging to see some dividend growth, but the dividend has been cut at least once, and the size of the cut would eliminate most of the growth anyway, which makes this less attractive as an income investment.

The Dividend Looks Likely To Grow

Growing earnings per share could be a mitigating factor when considering the past fluctuations in the dividend. Kingdom Holdings has seen EPS rising for the last five years, at 16% per annum. Kingdom Holdings definitely has the potential to grow its dividend in the future with earnings on an uptrend and a low payout ratio.

Kingdom Holdings Looks Like A Great Dividend Stock

Overall, a dividend increase is always good, and we think that Kingdom Holdings is a strong income stock thanks to its track record and growing earnings. Distributions are quite easily covered by earnings, which are also being converted to cash flows. All in all, this checks a lot of the boxes we look for when choosing an income stock.

Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. For instance, we've picked out 1 warning sign for Kingdom Holdings that investors should take into consideration. 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.