Excellence Commercial Property & Facilities Management Group (HKG:6989) Is Increasing Its Dividend To HK$0.17

The board of Excellence Commercial Property & Facilities Management Group Limited (HKG:6989) has announced that the dividend on 11th of July will be increased to HK$0.17, which will be 83% higher than last year. This takes the dividend yield from 8.7% to 9.4%, which shareholders will be pleased with.

While the dividend yield is important for income investors, it is also important to consider any large share price moves, as this will generally outweigh any gains from distributions. Excellence Commercial Property & Facilities Management Group's stock price has reduced by 31% in the last 3 months, which is not ideal for investors and can explain a sharp increase in the dividend yield.

Check out our latest analysis for Excellence Commercial Property & Facilities Management Group

Excellence Commercial Property & Facilities Management Group Is Paying Out More Than It Is Earning

We like to see robust dividend yields, but that doesn't matter if the payment isn't sustainable. Prior to this announcement, Excellence Commercial Property & Facilities Management Group's dividend made up quite a large proportion of earnings but only 43% of free cash flows. In general, cash flows are more important than earnings, so we are comfortable that the dividend will be sustainable going forward, especially with so much cash left over for reinvestment.

Over the next year, EPS is forecast to expand by 43.8%. Assuming the dividend continues along recent trends, we think the payout ratio could reach 109%, which probably can't continue putting some pressure on the balance sheet.

Excellence Commercial Property & Facilities Management Group Doesn't Have A Long Payment History

Without a track record of dividend payments, we can't make a judgement on how stable it has been. This doesn't mean that the company can't pay a good dividend, but just that we want to wait until it can prove itself.

The Dividend Looks Likely To Grow

Investors could be attracted to the stock based on the quality of its payment history. Excellence Commercial Property & Facilities Management Group has seen EPS grow by 24% in 12 months. This is a good sign, and could set the company up to be a solid dividend payer in the future if it continues. However, Excellence Commercial Property & Facilities Management Group isn't reinvesting a lot back into the business, so we wonder how quickly it will be able to grow in the future. We do note though, one year is too short a time to be drawing strong conclusions about a company's future prospects.

We Really Like Excellence Commercial Property & Facilities Management Group's Dividend

Overall, we think this could be an attractive income stock, and it is only getting better by paying a higher dividend this year. Distributions are quite easily covered by earnings, which are also being converted to cash flows. All of these factors considered, we think this has solid potential as a dividend stock.

Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. For instance, we've picked out 2 warning signs for Excellence Commercial Property & Facilities Management Group that investors should take into consideration. Is Excellence Commercial Property & Facilities Management Group 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.