Is It Worth Considering The Cross-Harbour (Holdings) Limited (HKG:32) For Its Upcoming Dividend?

The Cross-Harbour (Holdings) Limited (HKG:32) stock is about to trade ex-dividend in four days. The ex-dividend date is usually set to be one business day before the record date which is the cut-off date on which you must be present on the company's books as a shareholder in order to receive the dividend. The ex-dividend date is important because any transaction on a stock needs to have been settled before the record date in order to be eligible for a dividend. Accordingly, Cross-Harbour (Holdings) investors that purchase the stock on or after the 16th of December will not receive the dividend, which will be paid on the 30th of December.

The company's next dividend payment will be HK$0.06 per share. Last year, in total, the company distributed HK$0.42 to shareholders. Looking at the last 12 months of distributions, Cross-Harbour (Holdings) has a trailing yield of approximately 6.1% on its current stock price of HK$6.90. We love seeing companies pay a dividend, but it's also important to be sure that laying the golden eggs isn't going to kill our golden goose! So we need to investigate whether Cross-Harbour (Holdings) can afford its dividend, and if the dividend could grow.

View our latest analysis for Cross-Harbour (Holdings)

Dividends are typically paid out of company income, so if a company pays out more than it earned, its dividend is usually at a higher risk of being cut. Cross-Harbour (Holdings) paid out a comfortable 45% of its profit last year. Yet cash flows are even more important than profits for assessing a dividend, so we need to see if the company generated enough cash to pay its distribution. Dividends consumed 52% of the company's free cash flow last year, which is within a normal range for most dividend-paying organisations.

It's encouraging to see that the dividend is covered by both profit and cash flow. This generally suggests the dividend is sustainable, as long as earnings don't drop precipitously.

Click here to see how much of its profit Cross-Harbour (Holdings) paid out over the last 12 months.

Have Earnings And Dividends Been Growing?

When earnings decline, dividend companies become much harder to analyse and own safely. If business enters a downturn and the dividend is cut, the company could see its value fall precipitously. With that in mind, we're discomforted by Cross-Harbour (Holdings)'s 8.9% per annum decline in earnings in the past five years. Such a sharp decline casts doubt on the future sustainability of the dividend.

Many investors will assess a company's dividend performance by evaluating how much the dividend payments have changed over time. Cross-Harbour (Holdings) has delivered an average of 3.4% per year annual increase in its dividend, based on the past 10 years of dividend payments.

The Bottom Line

Is Cross-Harbour (Holdings) worth buying for its dividend? Earnings per share have fallen significantly, although at least Cross-Harbour (Holdings) paid out less than half of its profits and free cash flow over the last year, leaving some margin of safety. To summarise, Cross-Harbour (Holdings) looks okay on this analysis, although it doesn't appear a stand-out opportunity.

So if you want to do more digging on Cross-Harbour (Holdings), you'll find it worthwhile knowing the risks that this stock faces. In terms of investment risks, we've identified 1 warning sign with Cross-Harbour (Holdings) and understanding them should be part of your investment process.

A common investing mistake is buying the first interesting stock you see. Here you can find a full list of high-yield 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.