ManpowerGroup Greater China (HKG:2180) Is Increasing Its Dividend To HK$0.37

ManpowerGroup Greater China Limited (HKG:2180) has announced that it will be increasing its dividend on the 20th of July to HK$0.37. This will take the annual payment from 4.2% to 4.2% of the stock price, which is above what most companies in the industry pay.

See our latest analysis for ManpowerGroup Greater China

ManpowerGroup Greater China's Dividend Is Well Covered By Earnings

We like to see robust dividend yields, but that doesn't matter if the payment isn't sustainable. ManpowerGroup Greater China was earning enough to cover the previous dividend, but it was paying out quite a large proportion of its free cash flows. The company is clearly earning enough to pay this type of dividend, but it is definitely focused on returning cash to shareholders, rather than growing the business.

Over the next year, EPS could expand by 10.5% if recent trends continue. If the dividend continues on this path, the payout ratio could be 50% by next year, which we think can be pretty sustainable going forward.

ManpowerGroup Greater China Doesn't Have A Long Payment History

The dividend hasn't seen any major cuts in the past, but the company has only been paying a dividend for 2 years, which isn't that long in the grand scheme of things. The dividend has gone from CN¥0.22 in 2020 to the most recent annual payment of CN¥0.30. This works out to be a compound annual growth rate (CAGR) of approximately 16% a year over that time. The dividend has been growing rapidly, however with such a short payment history we can't know for sure if payment can continue to grow over the long term, so caution may be warranted.

The Dividend Looks Likely To Grow

Investors could be attracted to the stock based on the quality of its payment history. ManpowerGroup Greater China has impressed us by growing EPS at 10% per year over the past five years. Shareholders are getting plenty of the earnings returned to them, which combined with strong growth makes this quite appealing.

Our Thoughts On ManpowerGroup Greater China's Dividend

Overall, we always like to see the dividend being raised, but we don't think ManpowerGroup Greater China will make a great income stock. The low payout ratio is a redeeming feature, but generally we are not too happy with the payments ManpowerGroup Greater China has been making. Overall, we don't think this company has the makings of a good income stock.

Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. For example, we've identified 2 warning signs for ManpowerGroup Greater China (1 is a bit concerning!) that you should be aware of before investing. Is ManpowerGroup Greater China not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.