Great Eagle Holdings (HKG:41) Has Announced A Dividend Of HK$0.50

Great Eagle Holdings Limited (HKG:41) will pay a dividend of HK$0.50 on the 20th of June. This means the dividend yield will be fairly typical at 6.5%.

We've discovered 1 warning sign about Great Eagle Holdings. View them for free.

Great Eagle Holdings' Distributions May Be Difficult To Sustain

We aren't too impressed by dividend yields unless they can be sustained over time. While Great Eagle Holdings is not profitable, it is paying out less than 75% of its free cash flow, which means that there is plenty left over for reinvestment into the business. This gives us some comfort about the level of the dividend payments.

Over the next year, EPS could expand by 57.4% if recent trends continue. It's nice to see things moving in the right direction, but this probably won't be enough for the company to turn a profit. The healthy cash flows are definitely as good sign, though so we wouldn't panic just yet, especially with the earnings growing.

See our latest analysis for Great Eagle Holdings

Dividend Volatility

The company has a long dividend track record, but it doesn't look great with cuts in the past. The annual payment during the last 10 years was HK$0.70 in 2015, and the most recent fiscal year payment was HK$0.87. This works out to be a compound annual growth rate (CAGR) of approximately 2.2% a year over that time. It's encouraging to see some dividend growth, but the dividend has been cut at least once, and the size of the cut would eliminate most of the growth anyway, which makes this less attractive as an income investment.

The Company Could Face Some Challenges Growing The Dividend

Growing earnings per share could be a mitigating factor when considering the past fluctuations in the dividend. Great Eagle Holdings has impressed us by growing EPS at 57% per year over the past five years. The company hasn't been turning a profit, but it running in the right direction. If this trajectory continues and the company can turn a profit soon, it could bode well for the dividend going forward.

Our Thoughts On Great Eagle Holdings' Dividend

In summary, while it's good to see that the dividend hasn't been cut, we are a bit cautious about Great Eagle Holdings' payments, as there could be some issues with sustaining them into the future. 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.

Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. As an example, we've identified 1 warning sign for Great Eagle Holdings that you should be aware of before investing. If you are a dividend investor, you might also want to look at our curated list of high yield dividend stocks.

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