Johnson Electric Holdings (HKG:179) Is Paying Out A Dividend Of $0.44

Johnson Electric Holdings Limited (HKG:179) will pay a dividend of $0.44 on the 4th of September. This payment means the dividend yield will be 2.4%, which is below the average for the industry.

While the dividend yield is important for income investors, it is also important to consider any large share price moves, as this will generally outweigh any gains from distributions. Investors will be pleased to see that Johnson Electric Holdings' stock price has increased by 106% in the last 3 months, which is good for shareholders and can also explain a decrease in the dividend yield.

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Estimates Indicate Johnson Electric Holdings' Could Struggle to Maintain Dividend Payments In The Future

The dividend yield is a little bit low, but sustainability of the payments is also an important part of evaluating an income stock. However, prior to this announcement, Johnson Electric Holdings' dividend was comfortably covered by both cash flow and earnings. As a result, a large proportion of what it earned was being reinvested back into the business.

Earnings per share is forecast to rise by 8.4% over the next year. If the dividend continues on its recent course, the payout ratio in 12 months could be 198%, which is a bit high and could start applying pressure to the balance sheet.

View our latest analysis for Johnson Electric Holdings

Dividend Volatility

The company has a long dividend track record, but it doesn't look great with cuts in the past. The annual payment during the last 10 years was $0.0288 in 2015, and the most recent fiscal year payment was $0.0782. This means that it has been growing its distributions at 11% per annum over that time. It is great to see strong growth in the dividend payments, but cuts are concerning as it may indicate the payout policy is too ambitious.

The Dividend Looks Likely To Grow

Given that the dividend has been cut in the past, we need to check if earnings are growing and if that might lead to stronger dividends in the future. Johnson Electric Holdings has impressed us by growing EPS at 52% per year over the past five years. Earnings per share is growing at a solid clip, and the payout ratio is low which we think is an ideal combination in a dividend stock as the company can quite easily raise the dividend in the future.

Johnson Electric Holdings Looks Like A Great Dividend Stock

Overall, we like to see the dividend staying consistent, and we think Johnson Electric Holdings might even raise payments in the future. Earnings are easily covering distributions, and the company is generating plenty of cash. Taking this all into consideration, this looks like it could be a good dividend opportunity.

Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. See if management have their own wealth at stake, by checking insider shareholdings in Johnson Electric Holdings stock. Is Johnson Electric Holdings not quite the opportunity you were looking for? Why not check out our selection of top 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.