Fu Shou Yuan International Group (HKG:1448) Has Announced That Its Dividend Will Be Reduced To CN¥0.0686

Fu Shou Yuan International Group Limited (HKG:1448) has announced that on 28th of June, it will be paying a dividend ofCN¥0.0686, which a reduction from last year's comparable dividend. Based on this payment, the dividend yield will be 3.0%, which is lower than the average for the industry.

Check out our latest analysis for Fu Shou Yuan International Group

Fu Shou Yuan International Group's Payment Has Solid Earnings Coverage

The dividend yield is a little bit low, but sustainability of the payments is also an important part of evaluating an income stock. Prior to this announcement, Fu Shou Yuan International Group's dividend was comfortably covered by both cash flow and earnings. This indicates that a lot of the earnings are being reinvested into the business, with the aim of fueling growth.

Looking forward, earnings per share is forecast to rise by 48.4% over the next year. Assuming the dividend continues along recent trends, we think the payout ratio could be 36% by next year, which is in a pretty sustainable range.

Fu Shou Yuan International Group Has A Solid Track Record

Even over a long history of paying dividends, the company's distributions have been remarkably stable. Since 2014, the dividend has gone from CN¥0.031 total annually to CN¥0.147. This implies that the company grew its distributions at a yearly rate of about 17% over that duration. We can see that payments have shown some very nice upward momentum without faltering, which provides some reassurance that future payments will also be reliable.

We Could See Fu Shou Yuan International Group's Dividend Growing

Investors could be attracted to the stock based on the quality of its payment history. Fu Shou Yuan International Group has seen EPS rising for the last five years, at 9.4% per annum. Earnings are on the uptrend, and it is only paying a small portion of those earnings to shareholders.

We Really Like Fu Shou Yuan International Group's Dividend

It is generally not great to see the dividend being cut, but we don't think this should happen much if at all in the future given that Fu Shou Yuan International Group has the makings of a solid income stock moving forward. Reducing the amount it is paying as a dividend can protect the company's balance sheet, keeping the dividend sustainable for longer. 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. Earnings growth generally bodes well for the future value of company dividend payments. See if the 6 Fu Shou Yuan International Group analysts we track are forecasting continued growth with our free report on analyst estimates for the company. Is Fu Shou Yuan International Group 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.