Kingdom Holdings (HKG:528) Is Paying Out A Dividend Of CN¥0.09

The board of Kingdom Holdings Limited (HKG:528) has announced that it will pay a dividend of CN¥0.09 per share on the 24th of July. This means the annual payment is 7.1% of the current stock price, which is above the average for the industry.

See our latest analysis for Kingdom Holdings

Kingdom Holdings' Payment Has Solid Earnings Coverage

We like to see robust dividend yields, but that doesn't matter if the payment isn't sustainable. However, Kingdom Holdings' earnings easily cover the dividend. This means that most of what the business earns is being used to help it grow.

Over the next year, EPS could expand by 9.7% if recent trends continue. If the dividend continues on this path, the payout ratio could be 31% by next year, which we think can be pretty sustainable going forward.

Dividend Volatility

The company has a long dividend track record, but it doesn't look great with cuts in the past. Since 2014, the annual payment back then was CN¥0.0545, compared to the most recent full-year payment of CN¥0.0787. This implies that the company grew its distributions at a yearly rate of about 3.7% over that duration. 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.

We Could See Kingdom Holdings' Dividend Growing

Growing earnings per share could be a mitigating factor when considering the past fluctuations in the dividend. It's encouraging to see that Kingdom Holdings has been growing its earnings per share at 9.7% a year over the past five years. Growth in EPS bodes well for the dividend, as does the low payout ratio that the company is currently reporting.

Kingdom Holdings Looks Like A Great Dividend Stock

Overall, we like to see the dividend staying consistent, and we think Kingdom Holdings might even raise payments in the future. The company is easily earning enough to cover its dividend payments and it is great to see that these earnings are being translated into cash flow. All of these factors considered, we think this has solid potential as a dividend stock.

Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. For instance, we've picked out 2 warning signs for Kingdom Holdings that investors should take into consideration. Is Kingdom Holdings not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

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