XMH Holdings Limited (SGX:BQF) investors are to receive a payment of SGD0.015 per share on 22 September. Based on this payout, the dividend yield would be 4.2%, which is pretty typical for the industry.
While dividend yield is important to income investors, it is also important to consider any large share price moves, as this will typically exceed any gains from distributions. Investors will be pleased to see that XMH Holdings’ share price is up 42% over the past 3 months, which bodes well for shareholders and may also explain the shortfall in the dividend yield.
View our latest analysis for XMH Holdings
XMH Holdings’ payout has solid income coverage
We want the dividend to be consistent over a long period of time, so it is important to check whether it is sustainable or not. However, prior to this announcement, XMH Holdings’ dividend was comfortably covered by both cash flow and earnings. This means that most of its earnings are being put towards growing the business.
If the recent trend continues, there could be a 56.5% increase in EPS next year. If the dividend continues on this path, the payout ratio could be 22% by next year, which we think could be pretty sustainable going forward.
The company has a long dividend track record, but it hasn’t looked good with cuts in the past. The dividend has increased from an annual total of SGD0.04 in 2013 to the most recent total annual payout of SGD0.015. The dividend has declined by about 9.3% per year during that period. A company that reduces its dividend over time is usually not what we’re looking for.
Looks like dividend hike
Given that dividend payouts are shrinking like a glacier in a warming world, we need to examine whether there are some bright spots on the horizon. It’s encouraging to see that XMH Holdings has been growing its earnings per share at a rate of 57% per year over the past five years. A low payout ratio gives the company a lot of flexibility, and growing earnings also make it much easier to increase the dividend.
XMH Holdings Looks Like a Great Dividend Stock
Overall, we want the dividend to continue to grow, and we think XMH Holdings can grow the payout in the future as well. Earnings are easily covering distributions, and the company is generating plenty of cash. With all that in mind, it looks like this could be a good dividend opportunity.
Companies with a stable dividend policy will enjoy greater investor interest than companies suffering from a more inconsistent outlook. Still, investors need to consider many other factors besides dividend payouts when analyzing a company. To that end, XMH Holdings has 3 warning signs (and 1 that’s important) We think you should know about it. Are you looking for more high-yielding dividend ideas? try our Collection of strong dividend payers.
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This article from Simply Wall St is general in nature. We only provide commentary based on historical data and analyst forecasts using unbiased methodologies and our articles are not intended to provide financial advice. It is not a recommendation to buy or sell any stock, and does not take into account 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 take into account the latest price-sensitive company announcements or qualitative material. Simply Wall St does not have any position in any of the stocks mentioned.