Chaoju Eye Care Holdings (HKG:2219) Is Paying Out A Larger Dividend Than Last Year

Chaoju Eye Care Holdings Limited (HKG:2219) will increase its dividend from last year's comparable payment on the 28th of June to CN¥0.2975. This makes the dividend yield 5.6%, which is above the industry average.

See our latest analysis for Chaoju Eye Care Holdings

Chaoju Eye Care Holdings' Dividend Is Well Covered By Earnings

A big dividend yield for a few years doesn't mean much if it can't be sustained. The last dividend was quite easily covered by Chaoju Eye Care Holdings' earnings. This means that a large portion of its earnings are being retained to grow the business.

The next year is set to see EPS grow by 67.1%. If the dividend continues along recent trends, we estimate the payout ratio will be 52%, which is in the range that makes us comfortable with the sustainability of the dividend.

Chaoju Eye Care Holdings Doesn't Have A Long Payment History

The dividend has been pretty stable looking back, but the company hasn't been paying one for very long. This makes it tough to judge how it would fare through a full economic cycle. The annual payment during the last 2 years was CN¥0.0844 in 2022, and the most recent fiscal year payment was CN¥0.204. This means that it has been growing its distributions at 55% per annum over that time. It is always nice to see strong dividend growth, but with such a short payment history we wouldn't be inclined to rely on it until a longer track record can be developed.

The Dividend Looks Likely To Grow

Investors could be attracted to the stock based on the quality of its payment history. It's encouraging to see that Chaoju Eye Care Holdings has been growing its earnings per share at 15% a year over the past three years. Since earnings per share is growing at an acceptable rate, and the payout policy is balanced, we think the company is positioning itself well to grow earnings and dividends in the future.

Chaoju Eye Care Holdings Looks Like A Great Dividend Stock

Overall, a dividend increase is always good, and we think that Chaoju Eye Care Holdings is a strong income stock thanks to its track record and growing earnings. 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. Taking this all into consideration, this looks like it could be a good dividend opportunity.

Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. However, there are other things to consider for investors when analysing stock performance. Taking the debate a bit further, we've identified 1 warning sign for Chaoju Eye Care Holdings that investors need to be conscious of moving forward. Is Chaoju Eye Care Holdings not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

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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.