Powerlong Commercial Management Holdings (HKG:9909) Has Announced A Dividend Of CN¥0.15

Powerlong Commercial Management Holdings Limited (HKG:9909) will pay a dividend of CN¥0.15 on the 20th of December. The dividend yield will be 7.2% based on this payment which is still above the industry average.

View our latest analysis for Powerlong Commercial Management Holdings

Powerlong Commercial Management Holdings' Payment Has Solid Earnings Coverage

Impressive dividend yields are good, but this doesn't matter much if the payments can't be sustained. However, prior to this announcement, Powerlong Commercial Management Holdings' dividend was comfortably covered by both cash flow and earnings. This means that most of what the business earns is being used to help it grow.

Over the next year, EPS is forecast to expand by 54.0%. If the dividend continues on this path, the payout ratio could be 29% by next year, which we think can be pretty sustainable going forward.

Powerlong Commercial Management Holdings' Dividend Has Lacked Consistency

Even in its short history, we have seen the dividend cut. The annual payment during the last 3 years was CN¥0.179 in 2020, and the most recent fiscal year payment was CN¥0.28. This means that it has been growing its distributions at 16% per annum over that time. 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 see if earnings per share is growing. We are encouraged to see that Powerlong Commercial Management Holdings has grown earnings per share at 14% per year over the past three years. With a decent amount of growth and a low payout ratio, we think this bodes well for Powerlong Commercial Management Holdings' prospects of growing its dividend payments in the future.

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. The company is easily earning enough to cover its dividend payments and it is great to see that these earnings are being translated into cash flow. Taking this all into consideration, this looks like it could be a good dividend opportunity.

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. Taking the debate a bit further, we've identified 2 warning signs for Powerlong Commercial Management Holdings that investors need to be conscious of moving forward. Is Powerlong Commercial Management Holdings not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

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