WEILONG Delicious Global Holdings' (HKG:9985) Dividend Will Be CN¥0.198

WEILONG Delicious Global Holdings Ltd (HKG:9985) will pay a dividend of CN¥0.198 on the 20th of October. Despite this raise, the dividend yield of 3.9% is only a modest boost to shareholder returns.

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WEILONG Delicious Global Holdings' Payment Could Potentially Have Solid Earnings Coverage

It would be nice for the yield to be higher, but we should also check if higher levels of dividend payment would be sustainable. Based on the last dividend, WEILONG Delicious Global Holdings is earning enough to cover the payment, but then it makes up 106% of cash flows. The company might be more focused on returning cash to shareholders, but paying out this much of its cash flow could expose the dividend to being cut in the future.

Looking forward, earnings per share is forecast to rise by 56.0% over the next year. Assuming the dividend continues along recent trends, we think the payout ratio could be 68% by next year, which is in a pretty sustainable range.

See our latest analysis for WEILONG Delicious Global Holdings

WEILONG Delicious Global Holdings Doesn't Have A Long Payment History

The company has maintained a consistent dividend for a few years now, but we would like to see a longer track record before relying on it. The annual payment during the last 2 years was CN¥0.12 in 2023, and the most recent fiscal year payment was CN¥0.448. This means that it has been growing its distributions at 93% per annum over that time. WEILONG Delicious Global Holdings has been growing its dividend quite rapidly, which is exciting. However, the short payment history makes us question whether this performance will persist across a full market cycle.

WEILONG Delicious Global Holdings May Find It Hard To Grow The Dividend

Investors who have held shares in the company for the past few years will be happy with the dividend income they have received. However, WEILONG Delicious Global Holdings has only grown its earnings per share at 3.4% per annum over the past five years. Growth of 3.4% per annum is not particularly high, which might explain why the company is paying out a higher proportion of earnings. This could mean the dividend doesn't have the growth potential we look for going into the future.

Our Thoughts On WEILONG Delicious Global Holdings' Dividend

In summary, while it's always good to see the dividend being raised, we don't think WEILONG Delicious Global Holdings' payments are rock solid. While the low payout ratio is a redeeming feature, this is offset by the minimal cash to cover the payments. We would probably look elsewhere for an income investment.

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. For instance, we've picked out 2 warning signs for WEILONG Delicious Global Holdings that investors should take into consideration. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.

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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.