GDH Guangnan (Holdings)'s (HKG:1203) Shareholders Will Receive A Bigger Dividend Than Last Year

Simply Wall St · 04/14 22:49

GDH Guangnan (Holdings) Limited (HKG:1203) will increase its dividend on the 18th of July to HK$0.025, which is 25% higher than last year's payment from the same period of HK$0.02. This takes the dividend yield to 5.3%, which shareholders will be pleased with.

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GDH Guangnan (Holdings)'s Future Dividend Projections Appear Well Covered By Earnings

Impressive dividend yields are good, but this doesn't matter much if the payments can't be sustained. However, GDH Guangnan (Holdings)'s earnings easily cover the dividend. As a result, a large proportion of what it earned was being reinvested back into the business.

Over the next year, EPS could expand by 21.0% if recent trends continue. Assuming the dividend continues along recent trends, we think the payout ratio could be 18% by next year, which is in a pretty sustainable range.

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SEHK:1203 Historic Dividend April 14th 2025

See our latest analysis for GDH Guangnan (Holdings)

Dividend Volatility

While the company has been paying a dividend for a long time, it has cut the dividend at least once in the last 10 years. Since 2015, the annual payment back then was HK$0.04, compared to the most recent full-year payment of HK$0.035. The dividend has shrunk at around 1.3% a year during that period. Declining dividends isn't generally what we look for as they can indicate that the company is running into some challenges.

The Dividend Looks Likely To Grow

With a relatively unstable dividend, it's even more important to evaluate if earnings per share is growing, which could point to a growing dividend in the future. It's encouraging to see that GDH Guangnan (Holdings) has been growing its earnings per share at 21% a year over the past five years. Earnings per share is growing at a solid clip, and the payout ratio is low which we think is an ideal combination in a dividend stock as the company can quite easily raise the dividend in the future.

GDH Guangnan (Holdings) Looks Like A Great Dividend Stock

Overall, a dividend increase is always good, and we think that GDH Guangnan (Holdings) is a strong income stock thanks to its track record and growing earnings. Distributions are quite easily covered by earnings, which are also being converted to cash flows. All in all, this checks a lot of the boxes we look for when choosing an income stock.

It's important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. Taking the debate a bit further, we've identified 2 warning signs for GDH Guangnan (Holdings) that investors need to be conscious of moving forward. If you are a dividend investor, you might also want to look at our curated list of high yield dividend stocks.