Oi Wah Pawnshop Credit Holdings (HKG:1319) Is Increasing Its Dividend To HK$0.01

Oi Wah Pawnshop Credit Holdings Limited (HKG:1319) will increase its dividend on the 28th of November to HK$0.01, which is 56% higher than last year's payment from the same period of HK$0.0064. Despite this raise, the dividend yield of 5.6% is only a modest boost to shareholder returns.

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Oi Wah Pawnshop Credit Holdings' Future Dividend Projections Appear Well Covered By Earnings

While yield is important, another factor to consider about a company's dividend is whether the current payout levels are feasible. However, Oi Wah Pawnshop Credit Holdings' earnings easily cover the dividend. This means that most of its earnings are being retained to grow the business.

Looking forward, EPS could fall by 8.5% if the company can't turn things around from the last few years. If the dividend continues along the path it has been on recently, we estimate the payout ratio could be 61%, which is definitely feasible to continue.

See our latest analysis for Oi Wah Pawnshop Credit Holdings

Dividend Volatility

The company's dividend history has been marked by instability, with at least one cut in the last 10 years. The annual payment during the last 10 years was HK$0.015 in 2015, and the most recent fiscal year payment was HK$0.0145. Payments have been decreasing at a very slow pace in this time period. Generally, we don't like to see a dividend that has been declining over time as this can degrade shareholders' returns and indicate that the company may be running into problems.

Dividend Growth Is Doubtful

With a relatively unstable dividend, it's even more important to evaluate if earnings per share is growing, which could point to a growing dividend in the future. Oi Wah Pawnshop Credit Holdings has seen earnings per share falling at 8.5% per year over the last five years. A modest decline in earnings isn't great, and it makes it quite unlikely that the dividend will grow in the future unless that trend can be reversed.

Our Thoughts On Oi Wah Pawnshop Credit Holdings' Dividend

In summary, while it's always good to see the dividend being raised, we don't think Oi Wah Pawnshop Credit Holdings' payments are rock solid. The payments haven't been particularly stable and we don't see huge growth potential, but with the dividend well covered by cash flows it could prove to be reliable over the short term. We would be a touch cautious of relying on this stock primarily for the dividend income.

Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. However, there are other things to consider for investors when analysing stock performance. Just as an example, we've come across 3 warning signs for Oi Wah Pawnshop Credit Holdings you should be aware of, and 1 of them makes us a bit uncomfortable. Is Oi Wah Pawnshop Credit Holdings 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.