Analogue Holdings (HKG:1977) Has Announced That It Will Be Increasing Its Dividend To HK$0.026
Analogue Holdings Limited (HKG:1977) has announced that it will be increasing its periodic dividend on the 29th of September to HK$0.026, which will be 9.2% higher than last year's comparable payment amount of HK$0.0238. This makes the dividend yield about the same as the industry average at 5.2%.
Analogue Holdings' Projected Earnings Seem Likely To Cover Future Distributions
We like to see a healthy dividend yield, but that is only helpful to us if the payment can continue. Based on the last payment, Analogue Holdings was earning enough to cover the dividend, but free cash flows weren't positive. We think that cash flows should take priority over earnings, so this is definitely a worry for the dividend going forward.
Looking forward, EPS could fall by 11.4% if the company can't turn things around from the last few years. Assuming the dividend continues along recent trends, we believe the payout ratio could be 50%, which we are pretty comfortable with and we think is feasible on an earnings basis.
Check out our latest analysis for Analogue Holdings
Analogue Holdings' Dividend Has Lacked Consistency
Analogue Holdings has been paying dividends for a while, but the track record isn't stellar. If the company cuts once, it definitely isn't argument against the possibility of it cutting in the future. Since 2019, the dividend has gone from HK$0.077 total annually to HK$0.0438. Doing the maths, this is a decline of about 9.0% per year. A company that decreases its dividend over time generally isn't what we are looking for.
The Dividend Has Limited Growth Potential
Dividends have been going in the wrong direction, so we definitely want to see a different trend in the earnings per share. Analogue Holdings' EPS has fallen by approximately 11% per year during the past five years. Such rapid declines definitely have the potential to constrain dividend payments if the trend continues into the future.
Analogue Holdings' Dividend Doesn't Look Sustainable
Overall, this is probably not a great income stock, even though the dividend is being raised at the moment. With cash flows lacking, it is difficult to see how the company can sustain a dividend payment. We would be a touch cautious of relying on this stock primarily for the dividend income.
Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. Just as an example, we've come across 2 warning signs for Analogue Holdings you should be aware of, and 1 of them is concerning. Is Analogue Holdings not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.
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