Hong Kong Ferry (Holdings) (HKG:50) Is Due To Pay A Dividend Of HK$0.15

Hong Kong Ferry (Holdings) Company Limited's (HKG:50) investors are due to receive a payment of HK$0.15 per share on 23rd of June. Based on this payment, the dividend yield will be 5.7%, which is fairly typical for the industry.

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Hong Kong Ferry (Holdings)'s Projected Earnings Seem Likely To Cover Future Distributions

We like to see a healthy dividend yield, but that is only helpful to us if the payment can continue. Before making this announcement, Hong Kong Ferry (Holdings) was earning enough to cover the dividend, but it wasn't generating any free cash flows. Since a dividend means the company is paying out cash to investors, this could prove to be a problem in the future.

Over the next year, EPS could expand by 3.7% if recent trends continue. If the dividend continues along recent trends, we estimate the payout ratio will be 50%, which is in the range that makes us comfortable with the sustainability of the dividend.

View our latest analysis for Hong Kong Ferry (Holdings)

Dividend Volatility

The company's dividend history has been marked by instability, with at least one cut in the last 10 years. Since 2015, the dividend has gone from HK$0.36 total annually to HK$0.25. Doing the maths, this is a decline of about 3.6% per year. A company that decreases its dividend over time generally isn't what we are looking for.

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

Growing earnings per share could be a mitigating factor when considering the past fluctuations in the dividend. Earnings per share has been crawling upwards at 3.7% per year. Hong Kong Ferry (Holdings) is struggling to find viable investments, so it is returning more to shareholders. This isn't bad in itself, but unless earnings growth pick up we wouldn't expect dividends to grow either.

Our Thoughts On Hong Kong Ferry (Holdings)'s Dividend

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 Hong Kong Ferry (Holdings) is earning enough to cover the payments, the cash flows are lacking. 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. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. For example, we've picked out 1 warning sign for Hong Kong Ferry (Holdings) that investors should know about before committing capital to this stock. 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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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.