Powerlong Commercial Management Holdings (HKG:9909) Has Affirmed Its Dividend Of CN¥0.15

The board of Powerlong Commercial Management Holdings Limited (HKG:9909) has announced that it will pay a dividend of CN¥0.15 per share on the 20th of December. This means the annual payment is 10.0% of the current stock price, which is above the average for the industry.

Check out our latest analysis for Powerlong Commercial Management Holdings

Powerlong Commercial Management Holdings' Payment Has Solid Earnings Coverage

If the payments aren't sustainable, a high yield for a few years won't matter that much. Before making this announcement, Powerlong Commercial Management Holdings was easily earning enough to cover the dividend. This means that most of its earnings are being retained to grow the business.

Looking forward, earnings per share is forecast to rise by 35.4% over the next year. Assuming the dividend continues along recent trends, we think the payout ratio could be 33% by next year, which is in a pretty sustainable range.

Powerlong Commercial Management Holdings' 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. The annual payment during the last 4 years was CN¥0.179 in 2019, and the most recent fiscal year payment was CN¥0.28. This implies that the company grew its distributions at a yearly rate of about 12% over that duration. Powerlong Commercial Management Holdings has grown distributions at a rapid rate despite cutting the dividend at least once in the past. Companies that cut once often cut again, so we would be cautious about buying this stock solely for the dividend income.

The Dividend Looks Likely To Grow

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. It's encouraging to see that Powerlong Commercial Management Holdings has been growing its earnings per share at 14% a year over the past three years. A low payout ratio and decent growth suggests that the company is reinvesting well, and it also has plenty of room to increase the dividend over time.

Powerlong Commercial Management Holdings Looks Like A Great Dividend Stock

Overall, we like to see the dividend staying consistent, and we think Powerlong Commercial Management Holdings might even raise payments in the future. Distributions are quite easily covered by earnings, which are also being converted to cash flows. Taking this all into consideration, this looks like it could be a good dividend opportunity.

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 Powerlong Commercial Management Holdings that investors should know about before committing capital to this stock. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.

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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.