CIFI Holdings (Group) (HKG:884) Is Paying Out Less In Dividends Than Last Year

CIFI Holdings (Group) Co. Ltd. (HKG:884) has announced it will be reducing its dividend payable on the 31st of August to HK$0.07. Despite the cut, the dividend yield of 5.1% will still be comparable to other companies in the industry.

Check out our latest analysis for CIFI Holdings (Group)

CIFI Holdings (Group)'s Payment Has Solid Earnings Coverage

We like a dividend to be consistent over the long term, so checking whether it is sustainable is important. However, CIFI Holdings (Group)'s earnings easily 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 fall by 2.0%. If the dividend continues along the path it has been on recently, we estimate the payout ratio could be 25%, which is comfortable for the company to continue in the future.

CIFI Holdings (Group)'s Dividend Has Lacked Consistency

Even in its relatively short history, the company has reduced the dividend at least once. If the company cuts once, it definitely isn't argument against the possibility of it cutting in the future. The dividend has gone from CN¥0.031 in 2013 to the most recent annual payment of CN¥0.15. This implies that the company grew its distributions at a yearly rate of about 19% over that duration. It is great to see strong growth in the dividend payments, but cuts are concerning as it may indicate the payout policy is too ambitious.

The Dividend Looks Likely To Grow

Growing earnings per share could be a mitigating factor when considering the past fluctuations in the dividend. CIFI Holdings (Group) has impressed us by growing EPS at 16% per year over the past five years. CIFI Holdings (Group) definitely has the potential to grow its dividend in the future with earnings on an uptrend and a low payout ratio.

We Really Like CIFI Holdings (Group)'s Dividend

In general, we don't like to see the dividend being cut, especially when the company has such high potential like CIFI Holdings (Group) does. By reducing the dividend, pressure will be taken off the balance sheet, which could help the dividend to be consistent in the future. All in all, this checks a lot of the boxes we look for when choosing an income stock.

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. To that end, CIFI Holdings (Group) has 5 warning signs (and 1 which can't be ignored) we think you should know about. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.

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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.