EuroEyes International Eye Clinic's (HKG:1846) Dividend Will Be Reduced To HK$0.0489

EuroEyes International Eye Clinic Limited's (HKG:1846) dividend is being reduced from last year's payment covering the same period to HK$0.0489 on the 28th of June. This means that the dividend yield is 2.2%, which is a bit low when comparing to other companies in the industry.

See our latest analysis for EuroEyes International Eye Clinic

EuroEyes International Eye Clinic's Earnings Easily Cover The Distributions

While yield is important, another factor to consider about a company's dividend is whether the current payout levels are feasible. However, EuroEyes International Eye Clinic's earnings easily cover the dividend. As a result, a large proportion of what it earned was being reinvested back into the business.

If the trend of the last few years continues, EPS will grow by 21.7% over the next 12 months. If the dividend continues on this path, the payout ratio could be 21% by next year, which we think can be pretty sustainable going forward.

EuroEyes International Eye Clinic's Dividend Has Lacked Consistency

Looking back, the company hasn't been paying the most consistent dividend, but with such a short dividend history it could be too early to draw solid conclusions. Since 2021, the annual payment back then was HK$0.0299, compared to the most recent full-year payment of HK$0.102. This implies that the company grew its distributions at a yearly rate of about 51% over that duration. It is great to see strong growth in the dividend payments, but cuts are concerning as it may indicate the payout policy is too ambitious.

The Dividend Looks Likely To Grow

With a relatively unstable dividend, it's even more important to evaluate if earnings per share is growing, which could point to a growing dividend in the future. It's encouraging to see that EuroEyes International Eye Clinic has been growing its earnings per share at 22% a year over the past five years. Earnings per share is growing at a solid clip, and the payout ratio is low which we think is an ideal combination in a dividend stock as the company can quite easily raise the dividend in the future.

We Really Like EuroEyes International Eye Clinic's Dividend

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. By reducing the dividend, pressure will be taken off the balance sheet, which could help the dividend to be consistent in the future. All in all, this checks a lot of the boxes we look for when choosing an income 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. Now, if you want to look closer, it would be worth checking out our free research on EuroEyes International Eye Clinic management tenure, salary, and performance. 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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