China Pacific Insurance (Group)'s (SHSE:601601) Dividend Will Be CN¥1.02

The board of China Pacific Insurance (Group) Co., Ltd. (SHSE:601601) has announced that it will pay a dividend on the 12th of July, with investors receiving CN¥1.02 per share. This means that the annual payment will be 3.6% of the current stock price, which is in line with the average for the industry.

View our latest analysis for China Pacific Insurance (Group)

China Pacific Insurance (Group)'s Earnings Easily Cover The Distributions

Solid dividend yields are great, but they only really help us if the payment is sustainable. Before making this announcement, China Pacific Insurance (Group) was easily earning enough to cover the dividend. This means that most of its earnings are being retained to grow the business.

Over the next year, EPS is forecast to expand by 32.3%. If the dividend continues along recent trends, we estimate the payout ratio will be 29%, which is in the range that makes us comfortable with the sustainability of the dividend.

Dividend Volatility

The company's dividend history has been marked by instability, with at least one cut in the last 10 years. The annual payment during the last 10 years was CN¥0.40 in 2014, and the most recent fiscal year payment was CN¥1.02. This means that it has been growing its distributions at 9.8% per annum over that time. It's good to see the dividend growing at a decent rate, but the dividend has been cut at least once in the past. China Pacific Insurance (Group) might have put its house in order since then, but we remain cautious.

We Could See China Pacific Insurance (Group)'s Dividend Growing

With a relatively unstable dividend, it's even more important to evaluate if earnings per share is growing, which could point to a growing dividend in the future. China Pacific Insurance (Group) has seen EPS rising for the last five years, at 5.5% per annum. A low payout ratio and decent growth suggests that the company is reinvesting well, and it also has plenty of room to increase the dividend over time.

In Summary

Overall, we think China Pacific Insurance (Group) is a solid choice as a dividend stock, even though the dividend wasn't raised this year. While the payout ratios are a good sign, we are less enthusiastic about the company's dividend record. The dividend looks okay, but there have been some issues in the past, so we would be a little bit cautious.

Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. However, there are other things to consider for investors when analysing stock performance. For example, we've picked out 1 warning sign for China Pacific Insurance (Group) that investors should know about before committing capital to this stock. 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.

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