EVA Precision Industrial Holdings (HKG:838) Will Pay A Larger Dividend Than Last Year At HK$0.0176

EVA Precision Industrial Holdings Limited (HKG:838) has announced that it will be increasing its dividend from last year's comparable payment on the 9th of June to HK$0.0176. This will take the annual payment to 3.6% of the stock price, which is above what most companies in the industry pay.

See our latest analysis for EVA Precision Industrial Holdings

EVA Precision Industrial Holdings' Earnings Easily Cover The Distributions

While it is great to have a strong dividend yield, we should also consider whether the payment is sustainable. However, prior to this announcement, EVA Precision Industrial 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.

Looking forward, earnings per share is forecast to rise by 47.3% over the next year. If the dividend continues on this path, the payout ratio could be 22% by next year, which we think can be pretty sustainable going forward.

Dividend Volatility

The company's dividend history has been marked by instability, with at least one cut in the last 10 years. Since 2013, the annual payment back then was HK$0.014, compared to the most recent full-year payment of HK$0.0352. This means that it has been growing its distributions at 9.7% 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. EVA Precision Industrial Holdings might have put its house in order since then, but we remain cautious.

We Could See EVA Precision Industrial Holdings' Dividend Growing

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. EVA Precision Industrial Holdings has seen EPS rising for the last five years, at 9.8% 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.

EVA Precision Industrial Holdings Looks Like A Great Dividend Stock

Overall, a dividend increase is always good, and we think that EVA Precision Industrial Holdings is a strong income stock thanks to its track record and growing earnings. 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.

Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. However, there are other things to consider for investors when analysing stock performance. For example, we've picked out 1 warning sign for EVA Precision Industrial Holdings that investors should know about before committing capital to this stock. 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.