Powerlong Commercial Management Holdings (HKG:9909) Is Paying Out Less In Dividends Than Last Year

Powerlong Commercial Management Holdings Limited (HKG:9909) has announced that on 25th of October, it will be paying a dividend ofCN¥0.15, which a reduction from last year's comparable dividend. However, the dividend yield of 6.5% is still a decent boost to shareholder returns.

See our latest analysis for Powerlong Commercial Management Holdings

Powerlong Commercial Management Holdings' Earnings Easily Cover The Distributions

Impressive dividend yields are good, but this doesn't matter much if the payments can't be sustained. Before making this announcement, Powerlong Commercial Management Holdings was easily earning enough to cover the dividend. As a result, a large proportion of what it earned was being reinvested back into the business.

Over the next year, EPS is forecast to expand by 55.7%. If the dividend continues on this path, the payout ratio could be 28% by next year, which we think can be pretty sustainable going forward.

Powerlong Commercial Management Holdings' Dividend Has Lacked Consistency

The track record isn't the longest, but we are already seeing a bit of instability in the payments. Since 2020, the dividend has gone from CN¥0.179 total annually to CN¥0.262. This means that it has been growing its distributions at 14% per annum over that time. Despite the rapid growth in the dividend over the past number of years, we have seen the payments go down the past as well, so that makes us cautious.

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. Powerlong Commercial Management Holdings has impressed us by growing EPS at 16% per 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.

We Really Like Powerlong Commercial Management Holdings' Dividend

Overall, we think that Powerlong Commercial Management Holdings 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. Taking this all into consideration, this looks like it could be a good dividend opportunity.

It's important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. Taking the debate a bit further, we've identified 1 warning sign for Powerlong Commercial Management Holdings that investors need to be conscious of moving forward. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.

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