Hallenstein Glasson Holdings (NZSE:HLG) Has Announced That It Will Be Increasing Its Dividend To NZ$0.3354

Hallenstein Glasson Holdings Limited (NZSE:HLG) will increase its dividend from last year's comparable payment on the 12th of December to NZ$0.3354. This takes the annual payment to 5.6% of the current stock price, which is about average for the industry.

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Hallenstein Glasson Holdings' Projected Earnings Seem Likely To Cover Future Distributions

We aren't too impressed by dividend yields unless they can be sustained over time. Before this announcement, Hallenstein Glasson Holdings was paying out 83% of earnings, but a comparatively small 45% of free cash flows. This leaves plenty of cash for reinvestment into the business.

Over the next year, EPS is forecast to expand by 39.9%. Under the assumption that the dividend will continue along recent trends, we think the payout ratio could be 68% which would be quite comfortable going to take the dividend forward.

View our latest analysis for Hallenstein Glasson Holdings

Hallenstein Glasson Holdings Has A Solid Track Record

The company has been paying a dividend for a long time, and it has been quite stable which gives us confidence in the future dividend potential. Since 2015, the annual payment back then was NZ$0.31, compared to the most recent full-year payment of NZ$0.55. This works out to be a compound annual growth rate (CAGR) of approximately 5.9% a year over that time. The dividend has been growing very nicely for a number of years, and has given its shareholders some nice income in their portfolios.

Hallenstein Glasson Holdings Could Grow Its Dividend

Some investors will be chomping at the bit to buy some of the company's stock based on its dividend history. It's encouraging to see that Hallenstein Glasson Holdings has been growing its earnings per share at 7.3% a year over the past five years. Recently, the company has been able to grow earnings at a decent rate, but with the payout ratio on the higher end we don't think the dividend has many prospects for growth.

Our Thoughts On Hallenstein Glasson Holdings' Dividend

Overall, this is probably not a great income stock, even though the dividend is being raised at the moment. The company is generating plenty of cash, but we still think the dividend is a bit high for comfort. Overall, we don't think this company has the makings of a good 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. For instance, we've picked out 1 warning sign for Hallenstein Glasson Holdings that investors should take into consideration. Is Hallenstein Glasson Holdings not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

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