Four Seas Mercantile Holdings (HKG:374) Is Due To Pay A Dividend Of HK$0.065

Four Seas Mercantile Holdings Limited's (HKG:374) investors are due to receive a payment of HK$0.065 per share on 24th of September. This payment means the dividend yield will be 3.7%, which is below the average for the industry.

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Four Seas Mercantile Holdings' Future Dividends May Potentially Be At Risk

The dividend yield is a little bit low, but sustainability of the payments is also an important part of evaluating an income stock. Based on the last payment, Four Seas Mercantile Holdings' profits didn't cover the dividend, but the company was generating enough cash instead. Given that the dividend is a cash outflow, we think that cash is more important than accounting measures of profit when assessing the dividend, so this is a mitigating factor.

EPS is set to grow by 24.0% over the next year if recent trends continue. If the dividend continues on its recent course, the payout ratio in 12 months could be 287%, which is a bit high and could start applying pressure to the balance sheet.

Check out our latest analysis for Four Seas Mercantile Holdings

Four Seas Mercantile Holdings Has A Solid Track Record

The company has an extended history of paying stable dividends. The last annual payment of HK$0.095 was flat on the annual payment from10 years ago. 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.

Four Seas Mercantile Holdings Might Find It Hard To Grow Its Dividend

Investors could be attracted to the stock based on the quality of its payment history. Four Seas Mercantile Holdings has seen EPS rising for the last five years, at 24% per annum. Strong earnings is nice to see, but unless this can be sustained on minimal reinvestment of profits, we would question whether dividends will follow suit.

In Summary

Overall, we don't think this company makes a great dividend stock, even though the dividend wasn't cut this year. The company is generating plenty of cash, but we still think the dividend is a bit high for comfort. We would probably look elsewhere for an income investment.

Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. For example, we've identified 2 warning signs for Four Seas Mercantile Holdings (1 makes us a bit uncomfortable!) that you should be aware of before investing. If you are a dividend investor, you might also want to look at our curated list of high yield 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.