Stock Analysis

Melbourne Enterprises (HKG:158) Is Paying Out A Dividend Of HK$1.80

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Melbourne Enterprises Limited (HKG:158) will pay a dividend of HK$1.80 on the 9th of February. Including this payment, the dividend yield on the stock will be 3.4%, which is a modest boost for shareholders' returns.

Check out our latest analysis for Melbourne Enterprises

Melbourne Enterprises' Distributions May Be Difficult To Sustain

If it is predictable over a long period, even low dividend yields can be attractive. The company is paying out a large amount of its cash flows, even though it isn't generating any profit. This is quite a strong warning sign that the dividend may not be sustainable.

Over the next year, EPS might fall by 49.3% based on recent performance. This means the company won't be turning a profit, which could place managers in the tough spot of having to choose between suspending the dividend or putting more pressure on the balance sheet.

SEHK:158 Historic Dividend December 27th 2022

Dividend Volatility

The company has a long dividend track record, but it doesn't look great with cuts in the past. The dividend has gone from an annual total of HK$4.40 in 2012 to the most recent total annual payment of HK$3.60. Doing the maths, this is a decline of about 2.0% per year. Declining dividends isn't generally what we look for as they can indicate that the company is running into some challenges.

The Dividend Has Limited Growth Potential

Growing earnings per share could be a mitigating factor when considering the past fluctuations in the dividend. Melbourne Enterprises' EPS has fallen by approximately 49% per year during the past five years. This steep decline can indicate that the business is going through a tough time, which could constrain its ability to pay a larger dividend each year in the future.

We're Not Big Fans Of Melbourne Enterprises' Dividend

Overall, while some might be pleased that the dividend wasn't cut, we think this may help Melbourne Enterprises make more consistent payments in the future. The company's earnings aren't high enough to be making such big distributions, and it isn't backed up by strong growth or consistency either. Overall, this doesn't get us very excited from an income standpoint.

Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. As an example, we've identified 2 warning signs for Melbourne Enterprises that you should be aware of before investing. Is Melbourne Enterprises not quite the opportunity you were looking for? Why not check out our selection of top 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.