Eagle Nice (International) Holdings' (HKG:2368) Shareholders Will Receive A Bigger Dividend Than Last Year

The board of Eagle Nice (International) Holdings Limited (HKG:2368) has announced that it will be increasing its dividend on the 15th of September to HK$0.12. This will take the annual payment from 8.3% to 8.3% of the stock price, which is above what most companies in the industry pay.

See our latest analysis for Eagle Nice (International) Holdings

Eagle Nice (International) Holdings' Earnings Easily Cover the Distributions

Impressive dividend yields are good, but this doesn't matter much if the payments can't be sustained. Prior to this announcement, Eagle Nice (International) Holdings' dividend made up quite a large proportion of earnings but only 56% of free cash flows. This leaves plenty of cash for reinvestment into the business.

Looking forward, earnings per share could rise by 18.7% over the next year if the trend from the last few years continues. If the dividend continues on this path, the payout ratio could be 70% by next year, which we think can be pretty sustainable going forward.

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 first annual payment during the last 10 years was HK$0.15 in 2011, and the most recent fiscal year payment was HK$0.42. This works out to be a compound annual growth rate (CAGR) of approximately 11% a year over that time. Despite the rapid growth in the dividend over the past number of years, we have seen the payments go down the past as well, so that makes us cautious.

The Dividend Looks Likely To Grow

Growing earnings per share could be a mitigating factor when considering the past fluctuations in the dividend. It's encouraging to see Eagle Nice (International) Holdings has been growing its earnings per share at 19% a year over the past five years. EPS has been growing at a reasonable rate, although with most of the profits being paid out to shareholders, growth prospects could be more limited in the future.

Eagle Nice (International) Holdings Looks Like A Great Dividend Stock

Overall, a dividend increase is always good, and we think that Eagle Nice (International) 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.

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. As an example, we've identified 1 warning sign for Eagle Nice (International) Holdings that you should be aware of before investing. Looking for more high-yielding dividend ideas? Try our curated list of strong dividend payers.

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