Stock Analysis

Get Nice Financial Group (HKG:1469) Will Pay A Larger Dividend Than Last Year At HK$0.03

SEHK:1469
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Get Nice Financial Group Limited (HKG:1469) has announced that it will be increasing its dividend on the 10th of September to HK$0.03. This will take the annual payment from 6.8% to 6.8% of the stock price, which is above what most companies in the industry pay.

See our latest analysis for Get Nice Financial Group

Get Nice Financial Group Is Paying Out More Than It Is Earning

Impressive dividend yields are good, but this doesn't matter much if the payments can't be sustained. Before this announcement, Get Nice Financial Group was paying out 70% of earnings, but a comparatively small of free cash flows. Since the dividend is just paying out cash to shareholders, we care more about the cash payout ratio from which we can see plenty is being left over for reinvestment in the business.

Looking forward, EPS could fall by 69.9% if the company can't turn things around from the last few years. Assuming the dividend continues along recent trends, we believe the payout ratio could reach 236%, which could put the dividend under pressure if earnings don't start to improve.

historic-dividend
SEHK:1469 Historic Dividend July 4th 2021

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. Since 2016, the first annual payment was HK$0.04, compared to the most recent full-year 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. A reasonable rate of dividend growth is good to see, but we're wary that the dividend history is not as solid as we'd like, having been cut at least once.

Dividend Growth Potential Is Shaky

With a relatively unstable dividend, it's even more important to see if earnings per share is growing. Get Nice Financial Group's earnings per share has shrunk at 70% a year over the past five years. A sharp decline in earnings per share is not great from from a dividend perspective. Even conservative payout ratios can come under pressure if earnings fall far enough.

Our Thoughts On Get Nice Financial Group's Dividend

Overall, we always like to see the dividend being raised, but we don't think Get Nice Financial Group will make a great income stock. The company is generating plenty of cash, which could maintain the dividend for a while, but the track record hasn't been great. This company is not in the top tier of income providing stocks.

Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. Just as an example, we've come across 2 warning signs for Get Nice Financial Group you should be aware of, and 1 of them is concerning. If you are a dividend investor, you might also want to look at our curated list of high performing dividend stock.

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