Is It Worth Considering Eagle Nice (International) Holdings Limited (HKG:2368) For Its Upcoming Dividend?
Regular readers will know that we love our dividends at Simply Wall St, which is why it's exciting to see Eagle Nice (International) Holdings Limited (HKG:2368) is about to trade ex-dividend in the next 4 days. The ex-dividend date is two business days before a company's record date in most cases, which is the date on which the company determines which shareholders are entitled to receive a dividend. The ex-dividend date is an important date to be aware of as any purchase of the stock made on or after this date might mean a late settlement that doesn't show on the record date. Thus, you can purchase Eagle Nice (International) Holdings' shares before the 24th of August in order to receive the dividend, which the company will pay on the 11th of September.
The company's next dividend payment will be HK$0.02 per share, on the back of last year when the company paid a total of HK$0.26 to shareholders. Based on the last year's worth of payments, Eagle Nice (International) Holdings has a trailing yield of 9.0% on the current stock price of HK$2.90. If you buy this business for its dividend, you should have an idea of whether Eagle Nice (International) Holdings's dividend is reliable and sustainable. So we need to check whether the dividend payments are covered, and if earnings are growing.
If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. It paid out 86% of its earnings as dividends last year, which is not unreasonable, but limits reinvestment in the business and leaves the dividend vulnerable to a business downturn. We'd be concerned if earnings began to decline. Yet cash flow is typically more important than profit for assessing dividend sustainability, so we should always check if the company generated enough cash to afford its dividend. It distributed 34% of its free cash flow as dividends, a comfortable payout level for most companies.
It's positive to see that Eagle Nice (International) 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.
View our latest analysis for Eagle Nice (International) Holdings
Have Earnings And Dividends Been Growing?
Companies with falling earnings are riskier for dividend shareholders. If business enters a downturn and the dividend is cut, the company could see its value fall precipitously. Readers will understand then, why we're concerned to see Eagle Nice (International) Holdings's earnings per share have dropped 13% a year over the past five years. When earnings per share fall, the maximum amount of dividends that can be paid also falls.
Many investors will assess a company's dividend performance by evaluating how much the dividend payments have changed over time. Eagle Nice (International) Holdings has delivered 0.8% dividend growth per year on average over the past 10 years.
Final Takeaway
Is Eagle Nice (International) Holdings worth buying for its dividend? We're not enthused by the declining earnings per share, although at least the company's payout ratio is within a reasonable range, meaning it may not be at imminent risk of a dividend cut. In summary, while it has some positive characteristics, we're not inclined to race out and buy Eagle Nice (International) Holdings today.
However if you're still interested in Eagle Nice (International) Holdings as a potential investment, you should definitely consider some of the risks involved with Eagle Nice (International) Holdings. Our analysis shows 2 warning signs for Eagle Nice (International) Holdings that we strongly recommend you have a look at before investing in the company.
Generally, we wouldn't recommend just buying the first dividend stock you see. Here's a curated list of interesting stocks that are strong dividend payers.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.