Tradelink Electronic Commerce’s upcoming dividend (HKG: 536) will be higher than last year

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The advice of Tradelink Electronic Commerce Limited (HKG: 536) announced that the October 8 dividend will be raised to HK $ 0.028, which is 44% more than last year. This makes the dividend yield of 8.5%, which is above the industry average.

Check out our latest review for Tradelink Electronic Commerce

Tradelink e-commerce earns more than it earns

Impressive dividend yields are good, but it doesn’t matter much if the payouts can’t be sustained. According to the last payment, the company was not earning enough to cover what it was paying shareholders. Without increased earnings and cash flow, it would be difficult for the company to continue paying the dividend at this level.

Earnings per share could rise 0.4% over the next year if things go the way they have in recent years. If the dividend continues at its recent price, the 12 month payout rate could be 98%, which is a bit high and could start to put pressure on the balance sheet.

SEHK: 536 Historic dividend August 27, 2021

Dividend volatility

The history of the company’s dividends has been marked by instability, with at least one decline in the past 10 years. Since 2011, the first annual payment was HK $ 0.088, compared to the last annual payment of HK $ 0.092. Dividend payouts have increased by less than 1% per year during this period. We are happy to see that the dividend has increased, but with a limited growth rate and fluctuations in payments, the total shareholder return may be limited.

Dividend growth can be hard to achieve

Since the dividend has been reduced in the past, we need to check if the profits are increasing and if this could lead to higher dividends in the future. Unfortunately, Tradelink Electronic Commerce’s earnings per share have been essentially flat over the past five years, which means the dividend may not be increased every year. The company pays out a large portion of its profits, even if it increases those profits quite slowly. Limited recent earnings growth and a high payout ratio prevent us from considering strong future dividend growth unless the company has substantial pricing power or some form of competitive advantage. .

Tradelink Electronic Commerce dividend does not seem sustainable

Overall, it’s probably not a high-income stock, although the dividend is being increased. The track record is not great and the payouts are a bit high to be considered sustainable. We would be a little cautious if we were relying on this security primarily for dividend income.

It is important to note that companies with a consistent dividend policy will generate greater investor confidence than those with an erratic policy. Still, there are a host of other factors that investors need to consider, aside from dividend payments, when analyzing a business. As an example, we have met 2 warning signs for Tradelink Electronic Commerce you must be aware of this, and one of them cannot be ignored. If you are a dividend investor, you can also view our organized list of high performing dividend stocks.

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This Simply Wall St article is general in nature. We provide commentary based on historical data and analyst forecasts using only unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell shares and does not take into account your goals or your financial situation. Our aim is to bring you long-term, targeted analysis based on fundamental data. Note that our analysis may not take into account the latest announcements from price sensitive companies or qualitative documents. Simply Wall St has no position in any of the stocks mentioned.
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