Highway Holdings Limited (NASDAQ:HIHO) Pays A US$0.02 Dividend In Just Four Days

It looks like Highway Holdings Limited (NASDAQ:HIHO) is about to go ex-dividend in the next 4 days. Investors can purchase shares before the 26th of February in order to be eligible for this dividend, which will be paid on the 8th of April.

Highway Holdings's next dividend payment will be US$0.02 per share, and in the last 12 months, the company paid a total of US$0.18 per share. Based on the last year's worth of payments, Highway Holdings has a trailing yield of 3.7% on the current stock price of $4.9207. If you buy this business for its dividend, you should have an idea of whether Highway Holdings's dividend is reliable and sustainable. We need to see whether the dividend is covered by earnings and if it's growing.

Check out our latest analysis for Highway Holdings

Dividends are typically paid from company earnings. If a company pays more in dividends than it earned in profit, then the dividend could be unsustainable. Highway Holdings paid out a comfortable 49% of its profit last year.

Click here to see how much of its profit Highway Holdings paid out over the last 12 months.

Have Earnings And Dividends Been Growing?

Businesses with shrinking earnings are tricky from a dividend perspective. Investors love dividends, so if earnings fall and the dividend is reduced, expect a stock to be sold off heavily at the same time. Readers will understand then, why we're concerned to see Highway Holdings's earnings per share have dropped 12% a year over the past five years. Ultimately, when earnings per share decline, the size of the pie from which dividends can be paid, shrinks.

Many investors will assess a company's dividend performance by evaluating how much the dividend payments have changed over time. Highway Holdings has delivered 8.4% dividend growth per year on average over the past 10 years.

To Sum It Up

Has Highway Holdings got what it takes to maintain its dividend payments? Earnings per share are down meaningfully, although at least the company is paying out a low and conservative percentage of both its earnings and cash flow. It's definitely not great to see earnings falling, but at least there may be some buffer before the dividend needs to be cut. All things considered, we are not particularly enthused about Highway Holdings from a dividend perspective.

However if you're still interested in Highway Holdings as a potential investment, you should definitely consider some of the risks involved with Highway Holdings. Our analysis shows 4 warning signs for Highway Holdings that we strongly recommend you have a look at before investing in the company.

If you're in the market for dividend stocks, we recommend checking our list of top dividend stocks with a greater than 2% yield and an upcoming dividend.

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This article by Simply Wall St is general in nature. 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.
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