Kingdom Holdings (HKG:528) Will Pay A Larger Dividend Than Last Year At 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 6.3%, providing a nice boost to shareholder returns.

View our latest analysis for Kingdom Holdings

Kingdom Holdings' Dividend Is Well Covered By Earnings

We like to see robust dividend yields, but that doesn't matter if the payment isn't sustainable. However, prior to this announcement, Kingdom Holdings' dividend was comfortably covered by both cash flow and earnings. This means that most of its earnings are being retained to grow the business.

If the trend of the last few years continues, EPS will grow by 16.1% over the next 12 months. If the dividend continues on this path, the payout ratio could be 28% by next year, which we think can be pretty sustainable going forward.

Dividend Volatility

Although the company has a long dividend history, it has been cut at least once in the last 10 years. The dividend has gone from an annual total of CN¥0.0545 in 2013 to the most recent total annual payment of CN¥0.0788. This means that it has been growing its distributions at 3.8% per annum over that time. We're glad to see the dividend has risen, but with a limited rate of growth and fluctuations in the payments the total shareholder return may be limited.

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. With a decent amount of growth and a low payout ratio, we think this bodes well for Kingdom Holdings' prospects of growing its dividend payments in the future.

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.

Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. For example, we've picked out 1 warning sign for Kingdom Holdings that investors should know about before committing capital to this stock. 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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