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Dongyue Group Limited’s (HKG: 189) the dividend will be reduced to HK $ 0.14 on July 16. This payout brings the dividend yield up to 2.4%, which is only a slight boost to overall returns.
Discover our latest analysis for the Dongyue group
Dongyue Group Profits Easily Cover Distributions
It would be nice if the yield was higher, but we should also check whether higher levels of dividend payouts would be viable. However, Dongyue Group profits easily cover the dividend. This means that most of what the business earns is used to help it grow.
Next year is expected to see EPS increase by 37.8%. If the dividend continues on that path, the payout ratio could be 34% by next year, which we believe can be quite sustainable going forward.
Dividend volatility
Although the company has been paying a dividend for a long time, it has reduced the dividend at least once in the past 10 years. As of 2011, the first annual payment was CNY 0.11, compared to CNY 0.12 for the full year. Its dividends have grown 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 return to shareholders may be limited.
The dividend is expected to increase
Since the dividend has been reduced in the past, we need to check if profits are increasing and if this could lead to higher dividends in the future. The Dongyue Group has impressed us by increasing EPS by 28% per year over the past five years. The earnings per share are growing at a steady pace and the payout ratio is low, which in our opinion is an ideal combination in a dividend stock because the company can quite easily increase the dividend in the future.
Dongyue Group Looks Like a Big Dividend
It’s usually not great to see the dividend cut, but we don’t think it should happen much, if at all in the future, given that the Dongyue Group has the makings of a solid income. in the future. Reducing the amount he pays as a dividend can protect the company’s balance sheet, keeping the dividend lasting longer. Considering all of this, this looks like a good dividend opportunity.
Investors generally tend to favor companies with a consistent and stable dividend policy over those with an irregular policy. Still, there are a host of other factors that investors need to consider, aside from dividend payments, when analyzing a business. For example, we have chosen 2 warning signs for the Dongyue group that investors should consider. If you are a dividend investor, you can also check out our organized list of high performing dividend stocks.
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