Regular readers will know that we love our dividends at Simply Wall St, which is why it's exciting to see Wonderful Sky Financial Group Holdings Limited (HKG:1260) is about to trade ex-dividend in the next 4 days. You can purchase shares before the 2nd of October in order to receive the dividend, which the company will pay on the 18th of October.
Wonderful Sky Financial Group Holdings's next dividend payment will be HK$0.03 per share, and in the last 12 months, the company paid a total of HK$0.03 per share. Looking at the last 12 months of distributions, Wonderful Sky Financial Group Holdings has a trailing yield of approximately 3.6% on its current stock price of HK$0.75. Dividends are an important source of income to many shareholders, but the health of the business is crucial to maintaining those dividends. So we need to check whether the dividend payments are covered, and if earnings are growing.
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. Wonderful Sky Financial Group Holdings paid out just 20% of its profit last year, which we think is conservatively low and leaves plenty of margin for unexpected circumstances.
Have Earnings And Dividends Been Growing?
Companies with falling earnings are riskier for dividend shareholders. If earnings decline and the company is forced to cut its dividend, investors could watch the value of their investment go up in smoke. So we're not too excited that Wonderful Sky Financial Group Holdings's earnings are down 2.5% a year over the past five years.
The main way most investors will assess a company's dividend prospects is by checking the historical rate of dividend growth. Wonderful Sky Financial Group Holdings has delivered an average of 5.1% per year annual increase in its dividend, based on the past seven years of dividend payments.
The Bottom Line
Is Wonderful Sky Financial Group Holdings worth buying for its dividend? Wonderful Sky Financial Group Holdings's earnings per share are down over the past five years, although it has the cushion of a low payout ratio, which would suggest a cut to the dividend is relatively unlikely. In summary, Wonderful Sky Financial Group Holdings appears to have some promise as a dividend stock, and we'd suggest taking a closer look at it.
Curious about whether Wonderful Sky Financial Group Holdings has been able to consistently generate growth? Here's a chart of its historical revenue and earnings growth.
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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If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org. 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. Thank you for reading.