Hon Kwok Land Investment Company (HKG:160) Will Pay A Dividend Of HK$0.13

The board of Hon Kwok Land Investment Company, Limited (HKG:160) has announced that it will pay a dividend on the 22nd of September, with investors receiving HK$0.13 per share. Based on this payment, the dividend yield will be 4.8%, which is fairly typical for the industry.

See our latest analysis for Hon Kwok Land Investment Company

Hon Kwok Land Investment Company Is Paying Out More Than It Is Earning

Unless the payments are sustainable, the dividend yield doesn't mean too much. Based on the last payment, Hon Kwok Land Investment Company's profits didn't cover the dividend, but the company was generating enough cash instead. Generally, we think cash is more important than accounting measures of profit, so with the cash flows easily covering the dividend, we don't think there is much reason to worry.

If the company can't turn things around, EPS could fall by 31.0% over the next year. Assuming the dividend continues along recent trends, we believe the payout ratio could reach 142%, which could put the dividend under pressure if earnings don't start to improve.

Hon Kwok Land Investment Company Has A Solid Track Record

Even over a long history of paying dividends, the company's distributions have been remarkably stable. There hasn't been much of a change in the dividend over the last 10. Although we can't deny that the dividend has been remarkably stable in the past, the growth has been pretty muted.

Dividend Growth Potential Is Shaky

Investors could be attracted to the stock based on the quality of its payment history. However, initial appearances might be deceiving. Over the past five years, it looks as though Hon Kwok Land Investment Company's EPS has declined at around 31% a year. Such rapid declines definitely have the potential to constrain dividend payments if the trend continues into the future.

Our Thoughts On Hon Kwok Land Investment Company's Dividend

In summary, while it's good to see that the dividend hasn't been cut, we are a bit cautious about Hon Kwok Land Investment Company's payments, as there could be some issues with sustaining them into the future. The company is generating plenty of cash, but we still think the dividend is a bit high for comfort. This company is not in the top tier of income providing stocks.

Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. For example, we've identified 3 warning signs for Hon Kwok Land Investment Company (1 can't be ignored!) that you should be aware of before investing. Is Hon Kwok Land Investment Company 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.