China Resources Mixc Lifestyle Services (HKG:1209) Is Due To Pay A Dividend Of CN¥0.966

China Resources Mixc Lifestyle Services Limited (HKG:1209) will pay a dividend of CN¥0.966 on the 23rd of October. Although the dividend is now higher, the yield is only 4.3%, which is below the industry average.

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China Resources Mixc Lifestyle Services' Projections Indicate Future Payments May Be Unsustainable

It would be nice for the yield to be higher, but we should also check if higher levels of dividend payment would be sustainable. The last dividend made up a very large portion of earnings and also represented 90% of free cash flows. This is usually an indication that the focus of the company is returning cash to shareholders rather than reinvesting it for growth.

Over the next year, EPS is forecast to expand by 38.1%. However, if the dividend continues along recent trends, it could start putting pressure on the balance sheet with the payout ratio reaching 183% over the next year.

Check out our latest analysis for China Resources Mixc Lifestyle Services

China Resources Mixc Lifestyle Services' Dividend Has Lacked Consistency

Looking back, the dividend has been unstable but with a relatively short history, we think it may be a bit early to draw conclusions about long term dividend sustainability. Since 2021, the dividend has gone from CN¥0.132 total annually to CN¥1.52. This implies that the company grew its distributions at a yearly rate of about 84% over that duration. It is great to see strong growth in the dividend payments, but cuts are concerning as it may indicate the payout policy is too ambitious.

The Dividend Looks Likely To Grow

Given that the dividend has been cut in the past, we need to check if earnings are growing and if that might lead to stronger dividends in the future. We are encouraged to see that China Resources Mixc Lifestyle Services has grown earnings per share at 40% per year over the past five years. Earnings per share is growing nicely, but the company is paying out most of its earnings as dividends. This might be sustainable, but we wonder why China Resources Mixc Lifestyle Services is not retaining those earnings to reinvest in growth.

Our Thoughts On China Resources Mixc Lifestyle Services' Dividend

In summary, while it's always good to see the dividend being raised, we don't think China Resources Mixc Lifestyle Services' payments are rock solid. The company hasn't been paying a very consistent dividend over time, despite only paying out a small portion of earnings. Overall, we don't think this company has the makings of a good income stock.

Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. For instance, we've picked out 1 warning sign for China Resources Mixc Lifestyle Services that investors should take into consideration. Is China Resources Mixc Lifestyle Services 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.