Excellence Commercial Property & Facilities Management Group (HKG:6989) Will Pay A Smaller Dividend Than Last Year

Excellence Commercial Property & Facilities Management Group Limited (HKG:6989) is reducing its dividend from last year's comparable payment to CN¥0.0609 on the 11th of July. The yield is still above the industry average at 7.1%.

See our latest analysis for Excellence Commercial Property & Facilities Management Group

Excellence Commercial Property & Facilities Management Group's Payment Has Solid Earnings Coverage

If the payments aren't sustainable, a high yield for a few years won't matter that much. The last dividend was quite easily covered by Excellence Commercial Property & Facilities Management Group's earnings. This indicates that a lot of the earnings are being reinvested into the business, with the aim of fueling growth.

The next year is set to see EPS grow by 96.6%. Assuming the dividend continues along recent trends, we think the payout ratio could be 32% by next year, which is in a pretty sustainable range.

Excellence Commercial Property & Facilities Management Group's Dividend Has Lacked Consistency

The track record isn't the longest, but we are already seeing a bit of instability in the payments. The annual payment during the last 2 years was CN¥0.0784 in 2021, and the most recent fiscal year payment was CN¥0.181. This means that it has been growing its distributions at 52% per annum over that time. 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. Excellence Commercial Property & Facilities Management Group has impressed us by growing EPS at 19% per year over the past three years. The company is paying out a lot of its cash as a dividend, but it looks okay based on the payout ratio.

Excellence Commercial Property & Facilities Management Group Looks Like A Great Dividend Stock

Overall, we think that Excellence Commercial Property & Facilities Management Group could be a great option for a dividend investment, although we would have preferred if the dividend wasn't cut this year. By reducing the dividend, pressure will be taken off the balance sheet, which could help the dividend to be consistent in the future. All in all, this checks a lot of the boxes we look for when choosing an income stock.

Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. As an example, we've identified 1 warning sign for Excellence Commercial Property & Facilities Management Group 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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