Chow Sang Sang Holdings International Limited (HKG:116) stock is about to trade ex-dividend in 4 days time. Investors can purchase shares before the 10th of September in order to be eligible for this dividend, which will be paid on the 24th of September.
Chow Sang Sang Holdings International's next dividend payment will be HK$0.14 per share, on the back of last year when the company paid a total of HK$0.59 to shareholders. Based on the last year's worth of payments, Chow Sang Sang Holdings International has a trailing yield of 6.7% on the current stock price of HK$8.83. We love seeing companies pay a dividend, but it's also important to be sure that laying the golden eggs isn't going to kill our golden goose! So we need to investigate whether Chow Sang Sang Holdings International can afford its dividend, and if the dividend could grow.
If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. Fortunately Chow Sang Sang Holdings International's payout ratio is modest, at just 38% of profit. Yet cash flows are even more important than profits for assessing a dividend, so we need to see if the company generated enough cash to pay its distribution. Over the last year it paid out 66% of its free cash flow as dividends, within the usual range for most companies.
It's positive to see that Chow Sang Sang Holdings International's dividend is covered by both profits and cash flow, since this is generally a sign that the dividend is sustainable, and a lower payout ratio usually suggests a greater margin of safety before the dividend gets cut.
Have Earnings And Dividends Been Growing?
When earnings decline, dividend companies become much harder to analyse and own safely. If earnings decline and the company is forced to cut its dividend, investors could watch the value of their investment go up in smoke. That's why it's not ideal to see Chow Sang Sang Holdings International's earnings per share have been shrinking at 3.5% a year over the previous five years.
Many investors will assess a company's dividend performance by evaluating how much the dividend payments have changed over time. Chow Sang Sang Holdings International has delivered an average of 6.6% per year annual increase in its dividend, based on the past 10 years of dividend payments.
Has Chow Sang Sang Holdings International got what it takes to maintain its dividend payments? Earnings per share have fallen significantly, although at least Chow Sang Sang Holdings International paid out less than half of its profits and free cash flow over the last year, leaving some margin of safety. It might be worth researching if the company is reinvesting in growth projects that could grow earnings and dividends in the future, but for now we're not all that optimistic on its dividend prospects.
Curious what other investors think of Chow Sang Sang Holdings International? See what analysts are forecasting, with this visualisation of its historical and future estimated earnings and cash flow .
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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