Cross-Harbour (Holdings) (HKG:32) Has Affirmed Its Dividend Of HK$0.06

The board of The Cross-Harbour (Holdings) Limited (HKG:32) has announced that it will pay a dividend on the 7th of July, with investors receiving HK$0.06 per share. This payment means that the dividend yield will be 4.4%, which is around the industry average.

See our latest analysis for Cross-Harbour (Holdings)

Cross-Harbour (Holdings)'s Distributions May Be Difficult To Sustain

We like to see a healthy dividend yield, but that is only helpful to us if the payment can continue. Cross-Harbour (Holdings) is unprofitable despite paying a dividend, and it is paying out 117% of its free cash flow. These payout levels would generally be quite difficult to keep up.

Recent, EPS has fallen by 39.1%, so this could continue over the next year. This will push the company into unprofitability, which means the managers will have to choose between suspending the dividend, or paying it out of cash reserves.

Cross-Harbour (Holdings) Has A Solid Track Record

The company has been paying a dividend for a long time, and it has been quite stable which gives us confidence in the future dividend potential. The annual payment during the last 10 years was HK$0.30 in 2013, and the most recent fiscal year payment was HK$0.42. This means that it has been growing its distributions at 3.4% per annum over that time. While the consistency in the dividend payments is impressive, we think the relatively slow rate of growth is less attractive.

Dividend Growth Potential Is Shaky

The company's investors will be pleased to have been receiving dividend income for some time. Let's not jump to conclusions as things might not be as good as they appear on the surface. Cross-Harbour (Holdings)'s earnings per share has shrunk at 39% a year over the past 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.

Cross-Harbour (Holdings)'s Dividend Doesn't Look Sustainable

In summary, while it's good to see that the dividend hasn't been cut, we are a bit cautious about Cross-Harbour (Holdings)'s payments, as there could be some issues with sustaining them into the future. We can't deny that the payments have been very stable, but we are a little bit worried about the very high payout ratio. We would probably look elsewhere for an income investment.

Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. Taking the debate a bit further, we've identified 3 warning signs for Cross-Harbour (Holdings) that investors need to be conscious of moving forward. Is Cross-Harbour (Holdings) not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

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