Health and Happiness (H&H) International Holdings (HKG:1112) Will Pay A Smaller Dividend Than Last Year
Health and Happiness (H&H) International Holdings Limited (HKG:1112) has announced it will be reducing its dividend payable on the 12th of July to HK$0.17. The yield is still above the industry average at 5.7%.
View our latest analysis for Health and Happiness (H&H) International Holdings
Health and Happiness (H&H) International Holdings' Payment Has Solid Earnings Coverage
If the payments aren't sustainable, a high yield for a few years won't matter that much. Based on the last payment, Health and Happiness (H&H) International Holdings was quite comfortably earning enough to cover the dividend. This means that a large portion of its earnings are being retained to grow the business.
Looking forward, earnings per share is forecast to rise by 80.3% over the next year. If the dividend continues along recent trends, we estimate the payout ratio will be 43%, which is in the range that makes us comfortable with the sustainability of the dividend.
Dividend Volatility
Although the company has a long dividend history, it has been cut at least once in the last 10 years. The first annual payment during the last 10 years was CN¥0.16 in 2012, and the most recent fiscal year payment was CN¥0.28. This works out to be a compound annual growth rate (CAGR) of approximately 5.4% 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.
Dividend Growth Potential Is Shaky
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. Health and Happiness (H&H) International Holdings' EPS has fallen by approximately 12% per year during the past five years. Dividend payments are likely to come under some pressure unless EPS can pull out of the nosedive it is in. It's not all bad news though, as the earnings are predicted to rise over the next 12 months - we would just be a bit cautious until this becomes a long term trend.
Our Thoughts On Health and Happiness (H&H) International Holdings' Dividend
Overall, the dividend looks like it may have been a bit high, which explains why it has now been cut. 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 don't think Health and Happiness (H&H) International Holdings is a great stock to add to your portfolio if income is your focus.
Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. Case in point: We've spotted 4 warning signs for Health and Happiness (H&H) International Holdings (of which 1 can't be ignored!) you should know about. Is Health and Happiness (H&H) International Holdings not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.
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About SEHK:1112
Health and Happiness (H&H) International Holdings
An investment holding company, manufactures and sells pediatric nutrition, baby care, adult nutrition and care, and pet nutrition and care products in China, Australia, New Zealand, North America, and internationally.
Good value slight.