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. Based on this payment, the dividend yield will be 2.0%, which is lower than the average for 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. Before making this announcement, EuroEyes International Eye Clinic was easily earning enough to 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

The track record isn't the longest, but we are already seeing a bit of instability in the payments. Since 2021, the dividend has gone from HK$0.0299 total annually to HK$0.0978. This implies that the company grew its distributions at a yearly rate of about 48% 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

Growing earnings per share could be a mitigating factor when considering the past fluctuations in the dividend. We are encouraged to see that EuroEyes International Eye Clinic has grown earnings per share at 22% per 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

In general, we don't like to see the dividend being cut, especially when the company has such high potential like EuroEyes International Eye Clinic does. The cut will allow the company to continue paying out the dividend without putting the balance sheet under pressure, which means that it could remain sustainable for longer. All in all, this checks a lot of the boxes we look for when choosing an income stock.

Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. See if management have their own wealth at stake, by checking insider shareholdings in EuroEyes International Eye Clinic stock. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.

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