Intron Technology Holdings Limited (HKG:1760) has announced that on 2nd of July, it will be paying a dividend ofCN¥0.063, which a reduction from last year's comparable dividend. This means that the annual payment will be 4.7% of the current stock price, which is in line with the average for the industry.
Intron Technology 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. However, Intron Technology Holdings' earnings easily cover the dividend. This means that most of what the business earns is being used to help it grow.
Looking forward, earnings per share is forecast to rise by 92.9% over the next year. If the dividend continues on this path, the payout ratio could be 20% by next year, which we think can be pretty sustainable going forward.
View our latest analysis for Intron Technology Holdings
Intron Technology Holdings' Dividend Has Lacked Consistency
Intron Technology Holdings has been paying dividends for a while, but the track record isn't stellar. This makes us cautious about the consistency of the dividend over a full economic cycle. The dividend has gone from an annual total of CN¥0.0469 in 2019 to the most recent total annual payment of CN¥0.0588. This means that it has been growing its distributions at 3.8% per annum over that time. Modest growth in the dividend is good to see, but we think this is offset by historical cuts to the payments. It is hard to live on a dividend income if the company's earnings are not consistent.
The Dividend Looks Likely To Grow
Growing earnings per share could be a mitigating factor when considering the past fluctuations in the dividend. It's encouraging to see that Intron Technology Holdings has been growing its earnings per share at 11% a year over the past five years. A low payout ratio and decent growth suggests that the company is reinvesting well, and it also has plenty of room to increase the dividend over time.
We Really Like Intron Technology Holdings' Dividend
It is generally not great to see the dividend being cut, but we don't think this should happen much if at all in the future given that Intron Technology Holdings has the makings of a solid income stock moving forward. By reducing the dividend, pressure will be taken off the balance sheet, which could help the dividend to be consistent in the future. All of these factors considered, we think this has solid potential as a dividend stock.
It's important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. However, there are other things to consider for investors when analysing stock performance. Case in point: We've spotted 4 warning signs for Intron Technology Holdings (of which 2 can't be ignored!) you should know about. Is Intron Technology Holdings not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.
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