EuroEyes International Eye Clinic (HKG:1846) Will Pay A Dividend Of HK$0.0315

The board of EuroEyes International Eye Clinic Limited (HKG:1846) has announced that it will pay a dividend of HK$0.0315 per share on the 17th of October. This means that the annual payment is 1.9% of the current stock price, which is lower than what the rest of the industry is paying.

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EuroEyes International Eye Clinic's Future Dividend Projections Appear Well Covered By Earnings

Even a low dividend yield can be attractive if it is sustained for years on end. However, EuroEyes International Eye Clinic's earnings easily cover the dividend. This means that most of its earnings are being retained to grow the business.

The next year is set to see EPS grow by 26.3%. If the dividend continues along recent trends, we estimate the payout ratio will be 22%, which is in the range that makes us comfortable with the sustainability of the dividend.

View our latest analysis for EuroEyes International Eye Clinic

EuroEyes International Eye Clinic's Dividend Has Lacked Consistency

Even in its short history, we have seen the dividend cut. The dividend has gone from an annual total of HK$0.0299 in 2021 to the most recent total annual payment of HK$0.0594. This means that it has been growing its distributions at 19% per annum 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

Given that the dividend has been cut in the past, we need to check if earnings are growing and if that might lead to stronger dividends in the future. It's encouraging to see that EuroEyes International Eye Clinic has been growing its earnings per share at 50% a year over the past five years. Rapid earnings growth and a low payout ratio suggest this company has been effectively reinvesting in its business. Should that continue, this company could have a bright future.

EuroEyes International Eye Clinic Looks Like A Great Dividend Stock

Overall, we think that EuroEyes International Eye Clinic could be a great option for a dividend investment, although we would have preferred if the dividend wasn't cut this year. Reducing the amount it is paying as a dividend can protect the company's balance sheet, keeping the dividend sustainable for longer. All in all, this checks a lot of the boxes we look for when choosing an income stock.

Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. However, there are other things to consider for investors when analysing stock performance. For example, we've picked out 1 warning sign for EuroEyes International Eye Clinic that investors should know about before committing capital to this stock. If you are a dividend investor, you might also want to look at our curated list of high yield dividend stocks.

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