Cross-Harbour (Holdings)'s (HKG:32) Dividend Will Be HK$0.06

The board of The Cross-Harbour (Holdings) Limited (HKG:32) has announced that it will pay a dividend of HK$0.06 per share on the 16th of September. This payment means that the dividend yield will be 6.0%, which is around the industry average.

Check out our latest analysis for Cross-Harbour (Holdings)

Cross-Harbour (Holdings)'s Payment Has Solid Earnings Coverage

Unless the payments are sustainable, the dividend yield doesn't mean too much. Prior to this announcement, the company was paying out 1,265% of what it was earning, however the dividend was quite comfortably covered by free cash flows at a cash payout ratio of only 49%. Healthy cash flows are always a positive sign, especially when they quite easily cover the dividend.

Looking forward, EPS could fall by 22.9% if the company can't turn things around from the last few years. Assuming the dividend continues along recent trends, the payout ratio in 12 months could be 75%, which is more comfortable than the current payout ratio.

Cross-Harbour (Holdings) Has A Solid Track Record

Even over a long history of paying dividends, the company's distributions have been remarkably stable. The annual payment during the last 10 years was HK$0.30 in 2014, and the most recent fiscal year payment was HK$0.42. This works out to be a compound annual growth rate (CAGR) of approximately 3.4% a year over that time. Although we can't deny that the dividend has been remarkably stable in the past, the growth has been pretty muted.

The Dividend Has Limited Growth Potential

The company's investors will be pleased to have been receiving dividend income for some time. Unfortunately things aren't as good as they seem. Cross-Harbour (Holdings)'s EPS has fallen by approximately 23% per year during the past five years. Such rapid declines definitely have the potential to constrain dividend payments if the trend continues into the future.

In Summary

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. The company is generating plenty of cash, but we still think the dividend is a bit high for comfort. We would probably look elsewhere for an income investment.

Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. However, there are other things to consider for investors when analysing stock performance. To that end, Cross-Harbour (Holdings) has 2 warning signs (and 1 which is significant) we think you should know about. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.

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