The board of Get Nice Financial Group Limited (HKG:1469) has announced that it will pay a dividend of HK$0.03 per share on the 29th of December. Based on this payment, the dividend yield on the company's stock will be 7.1%, which is an attractive boost to shareholder returns.
Get Nice Financial Group's Payment Has Solid Earnings Coverage
We like to see robust dividend yields, but that doesn't matter if the payment isn't sustainable. However, Get Nice Financial Group's earnings easily cover the dividend. This means that most of what the business earns is being used to help it grow.
Looking forward, EPS could fall by 1.0% 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 27%, which is definitely feasible to continue.
Get Nice Financial Group's Dividend Has Lacked Consistency
Even in its relatively short history, the company has reduced the dividend at least once. This makes us cautious about the consistency of the dividend over a full economic cycle. The dividend has gone from HK$0.04 in 2016 to the most recent annual payment of HK$0.06. This works out to be a compound annual growth rate (CAGR) of approximately 8.4% a year over that time. We have seen cuts in the past, so while the growth looks promising we would be a little bit cautious about its track record.
Get Nice Financial Group May Find It Hard To Grow The Dividend
Given that the dividend has been cut in the past, we need to check if earnings are growing and if that might lead to stronger dividends in the future. Unfortunately, Get Nice Financial Group's earnings per share has been essentially flat over the past five years, which means the dividend may not be increased each year.
Our Thoughts On Get Nice Financial Group's Dividend
In summary, while it's good to see that the dividend hasn't been cut, we are a bit cautious about Get Nice Financial Group's payments, as there could be some issues with sustaining them into the future. 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. Overall, we don't think this company has the makings of a good income stock.
Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. For instance, we've picked out 1 warning sign for Get Nice Financial Group that investors should take into consideration. Looking for more high-yielding dividend ideas? Try our curated list of strong dividend payers.
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