K Cash Fintech (HKG:2483) Will Pay A Larger Dividend Than Last Year At HK$0.055

K Cash Fintech Corporation Limited's (HKG:2483) dividend will be increasing from last year's payment of the same period to HK$0.055 on 20th of June. Although the dividend is now higher, the yield is only 3.4%, which is below the industry average.

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K Cash Fintech's Payment Could Potentially Have Solid Earnings Coverage

It would be nice for the yield to be higher, but we should also check if higher levels of dividend payment would be sustainable. Based on the last payment, K Cash Fintech was quite comfortably earning enough to cover the dividend. This indicates that quite a large proportion of earnings is being invested back into the business.

If the company can't turn things around, EPS could fall by 12.1% over the next year. Assuming the dividend continues along recent trends, we think the payout ratio could reach 79%, which is definitely on the higher side.

View our latest analysis for K Cash Fintech

K Cash Fintech Is Still Building Its Track Record

It's not possible for us to make a backward looking judgement just based on a short payment history. This doesn't mean that the company can't pay a good dividend, but just that we want to wait until it can prove itself.

The Dividend Has Limited Growth Potential

The company's investors will be pleased to have been receiving dividend income for some time. However, initial appearances might be deceiving. Over the past five years, it looks as though K Cash Fintech's EPS has declined at around 12% a year. Such rapid declines definitely have the potential to constrain dividend payments if the trend continues into the future.

Our Thoughts On K Cash Fintech's Dividend

In summary, while it's always good to see the dividend being raised, we don't think K Cash Fintech's payments are rock solid. The company is generating plenty of cash, which could maintain the dividend for a while, but the track record hasn't been great. Overall, we don't think this company has the makings of a good income stock.

It's important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. For example, we've picked out 2 warning signs for K Cash Fintech that investors should know about before committing capital to this stock. Is K Cash Fintech not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

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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.