EVA Precision Industrial Holdings (HKG:838) Has Announced That It Will Be Increasing Its Dividend To HK$0.0176

EVA Precision Industrial Holdings Limited's (HKG:838) dividend will be increasing from last year's payment of the same period to HK$0.0176 on 23rd of September. Although the dividend is now higher, the yield is only 2.5%, which is below the industry average.

Check out our latest analysis for EVA Precision Industrial Holdings

EVA Precision Industrial Holdings' Earnings Easily Cover The Distributions

It would be nice for the yield to be higher, but we should also check if higher levels of dividend payment would be sustainable. EVA Precision Industrial Holdings is quite easily earning enough to cover the dividend, however it is being let down by weak cash flows. In general, we consider cash flow to be more important than earnings, so we would be cautious about relying on the sustainability of this dividend.

According to analysts, EPS should be several times higher next year. If the dividend extends its recent trend, estimates say the dividend could reach 8.4%, which we would be comfortable to see continuing.

Dividend Volatility

While the company has been paying a dividend for a long time, it has cut the dividend at least once in the last 10 years. The annual payment during the last 10 years was HK$0.032 in 2012, and the most recent fiscal year payment was HK$0.0352. Dividend payments have grown at less than 1% a year over this period. The dividend has seen some fluctuations in the past, so even though the dividend was raised this year, we should remember that it has been cut in the past.

The Dividend Looks Likely To Grow

With a relatively unstable dividend, it's even more important to see if earnings per share is growing. EVA Precision Industrial Holdings has impressed us by growing EPS at 13% per year over the past five years. EVA Precision Industrial Holdings definitely has the potential to grow its dividend in the future with earnings on an uptrend and a low payout ratio.

Our Thoughts On EVA Precision Industrial Holdings' Dividend

Overall, we always like to see the dividend being raised, but we don't think EVA Precision Industrial Holdings will make a great income stock. While EVA Precision Industrial Holdings is earning enough to cover the payments, the cash flows are lacking. We would be a touch cautious of relying on this stock primarily for the dividend income.

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. As an example, we've identified 1 warning sign for EVA Precision Industrial Holdings that you should be aware of before investing. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.

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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.