Stock Analysis

HRnetGroup's (SGX:CHZ) Upcoming Dividend Will Be Larger Than Last Year's

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HRnetGroup Limited's (SGX:CHZ) periodic dividend will be increasing on the 24th of May to SGD0.0213, with investors receiving 14% more than last year's SGD0.0187. This takes the dividend yield to 5.7%, which shareholders will be pleased with.

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HRnetGroup's Earnings Easily Cover The Distributions

While it is great to have a strong dividend yield, we should also consider whether the payment is sustainable. Based on the last payment, HRnetGroup was quite comfortably earning enough to cover the dividend. This indicates that quite a large proportion of earnings is being invested back into the business.

Over the next year, EPS is forecast to fall by 3.7%. If the dividend continues along the path it has been on recently, we estimate the payout ratio could be 72%, which is comfortable for the company to continue in the future.

SGX:CHZ Historic Dividend May 9th 2024

HRnetGroup Is Still Building Its Track Record

HRnetGroup's dividend has been pretty stable for a little while now, but we will continue to be cautious until it has been demonstrated for a few more years. The dividend has gone from an annual total of SGD0.023 in 2018 to the most recent total annual payment of SGD0.04. This means that it has been growing its distributions at 9.7% per annum over that time. HRnetGroup has been growing its dividend at a decent rate, and the payments have been stable. However, the payment history is very short, so there is no evidence yet that the dividend can be sustained over a full economic cycle.

We Could See HRnetGroup's Dividend Growing

Some investors will be chomping at the bit to buy some of the company's stock based on its dividend history. HRnetGroup has impressed us by growing EPS at 6.3% per year over the past five years. The company is paying a reasonable amount of earnings to shareholders, and is growing earnings at a decent rate so we think it could be a decent dividend stock.

In Summary

Overall, this is a reasonable dividend, and it being raised is an added bonus. The dividend has been at reasonable levels historically, but that hasn't translated into a consistent payment. The payment isn't stellar, but it could make a decent addition to a dividend portfolio.

Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. For example, we've identified 2 warning signs for HRnetGroup (1 shouldn't be ignored!) that you should be aware of before investing. Is HRnetGroup 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.