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Is It Smart To Buy Million Hope Industries Holdings Limited (HKG:1897) Before It Goes Ex-Dividend?

Simply Wall St

It looks like Million Hope Industries Holdings Limited (HKG:1897) is about to go ex-dividend in the next 4 days. If you purchase the stock on or after the 9th of December, you won't be eligible to receive this dividend, when it is paid on the 27th of December.

Million Hope Industries Holdings's upcoming dividend is HK$0.012 a share, following on from the last 12 months, when the company distributed a total of HK$0.024 per share to shareholders. Calculating the last year's worth of payments shows that Million Hope Industries Holdings has a trailing yield of 3.5% on the current share price of HK$0.68. 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! As a result, readers should always check whether Million Hope Industries Holdings has been able to grow its dividends, or if the dividend might be cut.

View our latest analysis for Million Hope Industries Holdings

Dividends are typically paid out of company income, so if a company pays out more than it earned, its dividend is usually at a higher risk of being cut. Million Hope Industries Holdings is paying out just 22% of its profit after tax, which is comfortably low and leaves plenty of breathing room in the case of adverse events.

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

SEHK:1897 Historical Dividend Yield, December 4th 2019

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 decline and the company is forced to cut its dividend, investors could watch the value of their investment go up in smoke.

Million Hope Industries Holdings also issued more than 5% of its market cap in new stock during the past year, which we feel is likely to hurt its dividend prospects in the long run. It's hard to grow dividends per share when a company keeps creating new shares.

This is Million Hope Industries Holdings's first year of paying a dividend, so it doesn't have much of a history yet to compare to.

To Sum It Up

From a dividend perspective, should investors buy or avoid Million Hope Industries Holdings? Earnings per share have been flat in recent years, although Million Hope Industries Holdings reinvests more than half its earnings in the business, which could suggest there are some growth projects that have not yet reached fruition. Million Hope Industries Holdings ticks a lot of boxes for us from a dividend perspective, and we think these characteristics should mark the company as deserving of further attention.

Keen to explore more data on Million Hope Industries 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.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. 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. Simply Wall St has no position in the stocks mentioned.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Thank you for reading.