Radiance Holdings (Group)'s (HKG:9993) Shareholders Will Receive A Smaller Dividend Than Last Year

By
Simply Wall St
Published
May 12, 2022
SEHK:9993
Source: Shutterstock

Radiance Holdings (Group) Company Limited's (HKG:9993) dividend is being reduced to HK$0.16 on the 23rd of September. This means that the dividend yield is 3.6%, which is a bit low when comparing to other companies in the industry.

Check out our latest analysis for Radiance Holdings (Group)

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

If it is predictable over a long period, even low dividend yields can be attractive. Before making this announcement, Radiance Holdings (Group) was easily earning enough to cover the dividend. This means that most of what the business earns is being used to help it grow.

Unless the company can turn things around, EPS could fall by 9.2% over the next year. If the dividend continues along recent trends, we estimate the payout ratio could be 22%, which we consider to be quite comfortable, with most of the company's earnings left over to grow the business in the future.

historic-dividend
SEHK:9993 Historic Dividend May 12th 2022

Radiance Holdings (Group) Is Still Building Its Track Record

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.

Dividend Growth Is Doubtful

Given that the track record hasn't been stellar, we really want to see earnings per share growing over time. Over the last 12 months, earnings are down by 9.2%. That's not great to see, but there could be a number of reasons for this. Should the decline continue, we would become concerned. Any one year of performance can be misleading for a variety of reasons, so we wouldn't like to form any strong conclusions based on these numbers alone.

In Summary

Overall, it's not great to see that the dividend has been cut, but this might be explained by the payments being a bit high previously. The company is generating plenty of cash, which could maintain the dividend for a while, but the track record hasn't been great. We would probably look elsewhere for an income investment.

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. For example, we've identified 2 warning signs for Radiance Holdings (Group) (1 is concerning!) that you should be aware of before investing. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.

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