Shandong Wit Dyne HealthLtd (SZSE:000915) Is Increasing Its Dividend To CN¥2.00

Shandong Wit Dyne Health Co.,Ltd. (SZSE:000915) will increase its dividend from last year's comparable payment on the 16th of May to CN¥2.00. This will take the annual payment to 5.5% of the stock price, which is above what most companies in the industry pay.

See our latest analysis for Shandong Wit Dyne HealthLtd

Shandong Wit Dyne HealthLtd's Payment Has Solid Earnings Coverage

A big dividend yield for a few years doesn't mean much if it can't be sustained. Before this announcement, Shandong Wit Dyne HealthLtd was paying out 79% of earnings, but a comparatively small 46% of free cash flows. This leaves plenty of cash for reinvestment into the business.

Over the next year, EPS is forecast to expand by 41.7%. Assuming the dividend continues along the course it has been charting recently, our estimates show the payout ratio being 72% which brings it into quite a comfortable range.

Shandong Wit Dyne HealthLtd Has A Solid Track Record

The company has a sustained record of paying dividends with very little fluctuation. The dividend has gone from an annual total of CN¥0.0769 in 2014 to the most recent total annual payment of CN¥2.00. This implies that the company grew its distributions at a yearly rate of about 39% over that duration. Rapidly growing dividends for a long time is a very valuable feature for an income stock.

Shandong Wit Dyne HealthLtd's Dividend Might Lack Growth

Investors who have held shares in the company for the past few years will be happy with the dividend income they have received. It's encouraging to see that Shandong Wit Dyne HealthLtd has been growing its earnings per share at 50% a year over the past five years. EPS is growing rapidly, although the company is also paying out a large portion of its profits as dividends. If earnings keep growing, the dividend may be sustainable, but generally we'd prefer to see a fast growing company reinvest in further growth.

In Summary

Overall, it's great to see the dividend being raised and that it is still in a sustainable range. The dividend is easily covered by cash flows and has a good track record, but we think the payout ratio might be a bit high. This looks like it could be a good dividend stock going forward, but we would note that the payout ratio has been at higher levels in the past so it could happen again.

Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. However, there are other things to consider for investors when analysing stock performance. Now, if you want to look closer, it would be worth checking out our free research on Shandong Wit Dyne HealthLtd management tenure, salary, and performance. 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.