Shanghai Gench Education Group's (HKG:1525) Dividend Will Be CN¥0.10

Shanghai Gench Education Group Limited (HKG:1525) has announced that it will pay a dividend of CN¥0.10 per share on the 17th of June. This means the annual payment is 8.5% of the current stock price, which is above the average for the industry.

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Shanghai Gench Education Group's Projected Earnings Seem Likely To Cover Future Distributions

We like to see robust dividend yields, but that doesn't matter if the payment isn't sustainable. Before making this announcement, Shanghai Gench Education Group was easily earning enough to cover the dividend. This means that most of its earnings are being retained to grow the business.

Over the next year, EPS could expand by 6.3% if recent trends continue. If the dividend continues along recent trends, we estimate the payout ratio will be 33%, which is in the range that makes us comfortable with the sustainability of the dividend.

See our latest analysis for Shanghai Gench Education Group

Shanghai Gench Education Group Doesn't Have A Long Payment History

Looking back, the dividend has been stable, but the company hasn't been paying a dividend for very long so we can't be confident that the dividend will remain stable through all economic environments. The annual payment during the last 4 years was CN¥0.145 in 2021, and the most recent fiscal year payment was CN¥0.186. This works out to be a compound annual growth rate (CAGR) of approximately 6.4% a year over that time. The dividend has been growing as a reasonable rate, which we like. However, investors will probably want to see a longer track record before they consider Shanghai Gench Education Group to be a consistent dividend paying stock.

We Could See Shanghai Gench Education Group's Dividend Growing

The company's investors will be pleased to have been receiving dividend income for some time. It's encouraging to see that Shanghai Gench Education Group has been growing its earnings per share at 6.3% 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.

Our Thoughts On Shanghai Gench Education Group's Dividend

In summary, we are pleased with the dividend remaining consistent, and we think there is a good chance of this continuing in the future. The dividend has been at reasonable levels historically, but that hasn't translated into a consistent payment. The dividend looks okay, but there have been some issues in the past, so we would be a little bit cautious.

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. See if management have their own wealth at stake, by checking insider shareholdings in Shanghai Gench Education Group 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.