Golik Holdings Limited (HKG:1118) will increase its dividend on the 24th of July to HK$0.04, which is 14% higher than last year's payment from the same period of HK$0.035. This makes the dividend yield 7.2%, which is above the industry average.
Our free stock report includes 2 warning signs investors should be aware of before investing in Golik Holdings. Read for free now.Golik Holdings' Payment Could Potentially Have 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, Golik Holdings was easily earning enough to 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 17.1% if recent trends continue. If the dividend continues on this path, the payout ratio could be 21% by next year, which we think can be pretty sustainable going forward.
See our latest analysis for Golik Holdings
Dividend Volatility
The company's dividend history has been marked by instability, with at least one cut in the last 10 years. The annual payment during the last 10 years was HK$0.05 in 2015, and the most recent fiscal year payment was HK$0.065. This means that it has been growing its distributions at 2.7% per annum over that time. The dividend has seen some fluctuations in the past, so even though the dividend was raised this year, we should remember that it has been cut in the past.
The Dividend Looks Likely To Grow
Growing earnings per share could be a mitigating factor when considering the past fluctuations in the dividend. We are encouraged to see that Golik Holdings has grown earnings per share at 17% per year over the past five years. Golik Holdings definitely has the potential to grow its dividend in the future with earnings on an uptrend and a low payout ratio.
We Really Like Golik Holdings' Dividend
In summary, it is always positive to see the dividend being increased, and we are particularly pleased with its overall sustainability. Earnings are easily covering distributions, and the company is generating plenty of cash. All in all, this checks a lot of the boxes we look for when choosing an income stock.
Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. However, there are other things to consider for investors when analysing stock performance. For example, we've picked out 2 warning signs for Golik Holdings that investors should know about before committing capital to this stock. Is Golik Holdings not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.
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