It looks like Hopefluent Group Holdings Limited (HKG:733) is about to go ex-dividend in the next 4 days. You will need to purchase shares before the 24th of September to receive the dividend, which will be paid on the 18th of October.
Hopefluent Group Holdings's upcoming dividend is HK$0.04 a share, following on from the last 12 months, when the company distributed a total of HK$0.1 per share to shareholders. Last year's total dividend payments show that Hopefluent Group Holdings has a trailing yield of 5.5% on the current share price of HK$2. Dividends are an important source of income to many shareholders, but the health of the business is crucial to maintaining those dividends. That's why we should always check whether the dividend payments appear sustainable, and if the company is growing.
Dividends are usually paid out of company profits, so if a company pays out more than it earned then its dividend is usually at greater risk of being cut. Hopefluent Group Holdings paid out just 25% of its profit last year, which we think is conservatively low and leaves plenty of margin for unexpected circumstances. A useful secondary check can be to evaluate whether Hopefluent Group Holdings generated enough free cash flow to afford its dividend. Luckily it paid out just 24% of its free cash flow last year.
It's positive to see that Hopefluent Group Holdings'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?
Stocks with flat earnings can still be attractive dividend payers, but it is important to be more conservative with your approach and demand a greater margin for safety when it comes to dividend sustainability. If earnings fall far enough, the company could be forced to cut its dividend. That explains why we're not overly excited about Hopefluent Group Holdings's flat earnings over the past five years. Better than seeing them fall off a cliff, for sure, but the best dividend stocks grow their earnings meaningfully over the long run.
Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. Since the start of our data, nine years ago, Hopefluent Group Holdings has lifted its dividend by approximately 5.5% a year on average.
The Bottom Line
Is Hopefluent Group Holdings worth buying for its dividend? While it's not great to see that earnings per share are effectively flat over the nine-year period we checked, at least the payout ratios are low and conservative. In summary, it's hard to get excited about Hopefluent Group Holdings from a dividend perspective.
Keen to explore more data on Hopefluent Group Holdings's financial performance? Check out our visualisation of its historical revenue and earnings growth.
We wouldn't recommend just buying the first dividend stock you see, though. Here's a list of interesting dividend stocks with a greater than 2% yield and an upcoming dividend.
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