Golden Resources Development International (HKG:677) Has Affirmed Its Dividend Of HK$0.012

Golden Resources Development International Limited's (HKG:677) investors are due to receive a payment of HK$0.012 per share on 19th of September. This means the annual payment is 5.0% of the current stock price, which is above the average for the industry.

Check out our latest analysis for Golden Resources Development International

Golden Resources Development International Doesn't Earn Enough To Cover Its Payments

A big dividend yield for a few years doesn't mean much if it can't be sustained. Prior to this announcement, the company was paying out 218% of what it was earning, however the dividend was quite comfortably covered by free cash flows at a cash payout ratio of only 35%. Healthy cash flows are always a positive sign, especially when they quite easily cover the dividend.

If the company can't turn things around, EPS could fall by 20.8% over the next year. If the dividend continues along the path it has been on recently, the payout ratio in 12 months could be 274%, which is definitely a bit high to be sustainable going forward.

Golden Resources Development International Has A Solid Track Record

The company has an extended history of paying stable dividends. The most recent annual payment of HK$0.024 is about the same as the annual payment 10 years ago. Although we can't deny that the dividend has been remarkably stable in the past, the growth has been pretty muted.

Dividend Growth Potential Is Shaky

Some investors will be chomping at the bit to buy some of the company's stock based on its dividend history. Unfortunately things aren't as good as they seem. Earnings per share has been sinking by 21% over the last five years. This steep decline can indicate that the business is going through a tough time, which could constrain its ability to pay a larger dividend each year in the future.

Our Thoughts On Golden Resources Development International's Dividend

Overall, it's nice to see a consistent dividend payment, but we think that longer term, the current level of payment might be unsustainable. The company is generating plenty of cash, but we still think the dividend is a bit high for comfort. Overall, we don't think this company has the makings of a good income stock.

It's important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. For example, we've identified 4 warning signs for Golden Resources Development International (1 shouldn't be ignored!) that you should be aware of before investing. Is Golden Resources Development International not quite the opportunity you were looking for? Why not check out our selection of top 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.