Stock Analysis

Get Nice Financial Group's (HKG:1469) Dividend Will Be HK$0.03

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The board of Get Nice Financial Group Limited (HKG:1469) has announced that it will pay a dividend on the 7th of September, with investors receiving HK$0.03 per share. This makes the dividend yield 9.1%, which will augment investor returns quite nicely.

See our latest analysis for Get Nice Financial Group

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

We like to see robust dividend yields, but that doesn't matter if the payment isn't sustainable. Based on the last payment, Get Nice Financial Group's profits didn't cover the dividend, but the company was generating enough cash instead. Given that the dividend is a cash outflow, we think that cash is more important than accounting measures of profit when assessing the dividend, so this is a mitigating factor.

If the company can't turn things around, EPS could fall by 11.6% over the next year. Assuming the dividend continues along recent trends, we believe the payout ratio could reach 114%, which could put the dividend under pressure if earnings don't start to improve.

SEHK:1469 Historic Dividend August 27th 2023

Get Nice Financial Group's Dividend Has Lacked Consistency

Looking back, Get Nice Financial Group's dividend hasn't been particularly consistent. Due to this, we are a little bit cautious about the dividend consistency over a full economic cycle. Since 2016, the dividend has gone from HK$0.04 total annually to HK$0.06. This implies that the company grew its distributions at a yearly rate of about 6.0% over that duration. We have seen cuts in the past, so while the growth looks promising we would be a little bit cautious about its track record.

The Dividend Has Limited Growth Potential

Growing earnings per share could be a mitigating factor when considering the past fluctuations in the dividend. Over the past five years, it looks as though Get Nice Financial Group's EPS has declined at around 12% a year. Such rapid declines definitely have the potential to constrain dividend payments if the trend continues into the future.

The Dividend Could Prove To Be Unreliable

Overall, it's nice to see a consistent dividend payment, but we think that longer term, the current level of payment might be unsustainable. In the past, the payments have been unstable, but over the short term the dividend could be reliable, with the company generating enough cash to cover it. We would be a touch cautious of relying on this stock primarily for the dividend income.

It's important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. Taking the debate a bit further, we've identified 2 warning signs for Get Nice Financial Group that investors need to be conscious of moving forward. Is Get Nice Financial Group 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.