Miramar Hotel and Investment Company, Limited (HKG:71) has announced that it will pay a dividend of HK$0.23 per share on the 14th of October. This makes the dividend yield 5.6%, which will augment investor returns quite nicely.
Check out our latest analysis for Miramar Hotel and Investment Company
Miramar Hotel and Investment Company's Payment Has Solid Earnings Coverage
If the payments aren't sustainable, a high yield for a few years won't matter that much. Before making this announcement, Miramar Hotel and Investment Company was easily earning enough to cover the dividend. This means that most of what the business earns is being used to help it grow.
Looking forward, EPS could fall by 8.8% 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 41%, which we are pretty comfortable with and we think is feasible on an earnings basis.
Miramar Hotel and Investment Company Has A Solid Track Record
The company has a sustained record of paying dividends with very little fluctuation. The annual payment during the last 10 years was HK$0.44 in 2014, and the most recent fiscal year payment was HK$0.53. This implies that the company grew its distributions at a yearly rate of about 1.9% over that duration. Slow and steady dividend growth might not sound that exciting, but dividends have been stable for ten years, which we think makes this a fairly attractive offer.
Dividend Growth Is Doubtful
The company's investors will be pleased to have been receiving dividend income for some time. However, things aren't all that rosy. In the last five years, Miramar Hotel and Investment Company's earnings per share has shrunk at approximately 8.8% per annum. If the company is making less over time, it naturally follows that it will also have to pay out less in dividends.
Our Thoughts On Miramar Hotel and Investment Company's Dividend
Overall, we think Miramar Hotel and Investment Company is a solid choice as a dividend stock, even though the dividend wasn't raised this year. The earnings coverage is acceptable for now, but with earnings on the decline we would definitely keep an eye on the payout ratio. The dividend looks okay, but there have been some issues in the past, so we would be a little bit cautious.
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. As an example, we've identified 1 warning sign for Miramar Hotel and Investment Company that you should be aware of before investing. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.
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