Shanghai Gench Education Group (HKG:1525) Has Announced A Dividend Of CN¥0.10

The board of Shanghai Gench Education Group Limited (HKG:1525) has announced that it will pay a dividend on the 25th of October, with investors receiving CN¥0.10 per share. This means that the annual payment will be 6.8% of the current stock price, which is in line with the average for the industry.

View our latest analysis for Shanghai Gench Education Group

Shanghai Gench Education Group's Payment Could Potentially Have Solid Earnings Coverage

We like a dividend to be consistent over the long term, so checking whether it is sustainable is important. Before making this announcement, Shanghai Gench Education Group was easily earning enough to cover the dividend. This means that most of what the business earns is being used to help it grow.

Over the next year, EPS is forecast to expand by 39.0%. If the dividend continues along recent trends, we estimate the payout ratio will be 20%, which is in the range that makes us comfortable with the sustainability of the dividend.

Shanghai Gench Education Group 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 3 years, which isn't that long in the grand scheme of things. Since 2021, the annual payment back then was CN¥0.145, compared to the most recent full-year payment of CN¥0.18. This means that it has been growing its distributions at 7.4% per annum over that time. Shanghai Gench Education Group has a nice track record of dividend growth but we would wait until we see a longer track record before getting too confident.

We Could See Shanghai Gench Education Group's Dividend Growing

Some investors will be chomping at the bit to buy some of the company's stock based on its dividend history. It's encouraging to see that Shanghai Gench Education Group has been growing its earnings per share at 8.8% a year over the past five years. With a decent amount of growth and a low payout ratio, we think this bodes well for Shanghai Gench Education Group's prospects of growing its dividend payments in the future.

We Really Like Shanghai Gench Education Group's Dividend

In summary, it is good to see that the dividend is staying consistent, and we don't think there is any reason to suspect this might change over the medium term. The company is easily earning enough to cover its dividend payments and it is great to see that these earnings are being translated into cash flow. All of these factors considered, we think this has solid potential as a dividend stock.

It's important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. However, there are other things to consider for investors when analysing stock performance. As an example, we've identified 1 warning sign for Shanghai Gench Education Group 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.