Hong Kong Ferry (Holdings) (HKG:50) Has Announced A Dividend Of HK$0.10

The board of Hong Kong Ferry (Holdings) Company Limited (HKG:50) has announced that it will pay a dividend on the 27th of September, with investors receiving HK$0.10 per share. This payment means that the dividend yield will be 6.0%, which is around the industry average.

View our latest analysis for Hong Kong Ferry (Holdings)

Hong Kong Ferry (Holdings)'s Dividend Is Well Covered By Earnings

While it is always good to see a solid dividend yield, we should also consider whether the payment is feasible. Based on the last payment, Hong Kong Ferry (Holdings) was paying only paying out a fraction of earnings, but the payment was a massive 434% of cash flows. A cash payout ratio this high could put the dividend under pressure and force the company to reduce it in the future if it were to run into tough times.

Over the next year, EPS could expand by 3.7% if recent trends continue. If the dividend continues on this path, the payout ratio could be 43% by next year, which we think can be pretty sustainable going forward.

Dividend Volatility

The company's dividend history has been marked by instability, with at least one cut in the last 10 years. Since 2014, the annual payment back then was HK$0.36, compared to the most recent full-year payment of HK$0.25. This works out to be a decline of approximately 3.6% per year over that time. Declining dividends isn't generally what we look for as they can indicate that the company is running into some challenges.

Hong Kong Ferry (Holdings) May Find It Hard To Grow The Dividend

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. Earnings have grown at around 3.7% a year for the past five years, which isn't massive but still better than seeing them shrink. While EPS growth is quite low, Hong Kong Ferry (Holdings) has the option to increase the payout ratio to return more cash to shareholders.

In Summary

In summary, while it's good to see that the dividend hasn't been cut, we are a bit cautious about Hong Kong Ferry (Holdings)'s payments, as there could be some issues with sustaining them into the future. While the low payout ratio is a redeeming feature, this is offset by the minimal cash to cover the payments. We would be a touch cautious of relying on this stock primarily for the dividend income.

Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. For instance, we've picked out 2 warning signs for Hong Kong Ferry (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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