Smoore International Holdings (HKG:6969) Is Reducing Its Dividend To CN¥0.08

Smoore International Holdings Limited (HKG:6969) has announced that on 16th of June, it will be paying a dividend ofCN¥0.08, which a reduction from last year's comparable dividend. This means that the annual payment is 1.5% of the current stock price, which is lower than what the rest of the industry is paying.

See our latest analysis for Smoore International Holdings

Smoore International Holdings' Earnings Easily Cover The Distributions

If it is predictable over a long period, even low dividend yields can be attractive. Smoore International Holdings is quite easily earning enough to cover the dividend, however it is being let down by weak cash flows. With the company not bringing in any cash, paying out to shareholders is bound to become difficult at some point.

Looking forward, earnings per share is forecast to rise by 58.2% over the next year. If the dividend continues along recent trends, we estimate the payout ratio will be 28%, which is in the range that makes us comfortable with the sustainability of the dividend.

Smoore International Holdings' Dividend Has Lacked Consistency

Even in its short history, we have seen the dividend cut. The annual payment during the last 2 years was CN¥0.222 in 2021, and the most recent fiscal year payment was CN¥0.14. This works out to a decline of approximately 37% over that time. Declining dividends isn't generally what we look for as they can indicate that the company is running into some challenges.

The Dividend Looks Likely To Grow

Dividends have been going in the wrong direction, so we definitely want to see a different trend in the earnings per share. Smoore International Holdings has seen EPS rising for the last five years, at 62% per annum. Rapid earnings growth and a low payout ratio suggest this company has been effectively reinvesting in its business. Should that continue, this company could have a bright future.

Our Thoughts On Smoore International Holdings' Dividend

Overall, it's not great to see that the dividend has been cut, but this might be explained by the payments being a bit high previously. While Smoore International Holdings is earning enough to cover the payments, the cash flows are lacking. We don't think Smoore International Holdings is a great stock to add to your portfolio if income is your focus.

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. For example, we've picked out 1 warning sign for Smoore International Holdings that investors should know about before committing capital to this stock. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.

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