Investors in FSE Lifestyle Services Limited (HKG:331) will receive a payment of HK$0.214 per share on December 16th. This results in a dividend yield of 7.6%, which is above the industry average.
See our latest analysis for FSE Lifestyle Services.
Payment for FSE lifestyle services could cover solid revenue
We like to see solid dividend yields, but we don’t mind if the payments aren’t sustainable. The last dividend was easily covered by FSE Lifestyle Services’ earnings. This indicates that a significant portion of the profits are invested in the business.
EPS is expected to expand by 26.1% next year. Assuming the dividend continues in line with recent trends, the payout ratio could be 37% by next year, which would be well within a sustainable range.
SEHK:331 Historic Dividend October 29, 2024
FSE Lifestyle Services’ dividend is inconsistent
Looking back, FSE Lifestyle Services’ dividend isn’t all that stable. This makes us a little more cautious about dividend consistency across the economic cycle. The annual payment for the past nine years was HK$0.10 in 2015 and the most recent financial year payment was HK$0.438. This works out to be a compound annual growth rate (CAGR) of approximately 18% over that period. Dividends have grown rapidly during this time, but with a history of dividend cuts, we’re not sure if this stock will be a reliable source of income in the future.
FSE Lifestyle Services dividend could increase
Earnings per share growth could be a mitigating factor, given historical dividend movements. FSE Lifestyle Services’ EPS has grown at 9.9% per year over the past five years. However, the lack of cash flow makes us a little cautious about the future of the company, especially its dividend.
FSE Lifestyle Services looks like a high dividend stock
In summary, it’s always positive to see a growing dividend, and we’re particularly pleased with its overall sustainability. Profits easily cover distributions, and the company generates a lot of cash. Overall, this ticks a lot of boxes that we look for when choosing income stocks.
Investors generally prefer companies with consistent and stable dividend policies over companies with irregular dividend policies. Still, investors need to consider more factors than dividends when analyzing a company. As an example, we’ve identified 1 warning sign for FSE Lifestyle Services that you should be aware of before investing. Looking for more high-yield dividend ideas? Check out our collection of high-yield stocks.
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This article by Simply Wall St is general in nature. We provide commentary using only unbiased methodologies, based on historical data and analyst forecasts, and articles are not intended to be financial advice. This is not a recommendation to buy or sell any stock, and does not take into account your objectives or financial situation. We aim to provide long-term, focused analysis based on fundamental data. Note that our analysis may not factor in the latest announcements or qualitative material from price-sensitive companies. Simply Wall St has no position in any stocks mentioned.
