Chaoju Eye Care Holdings (HKG:2219) Will Pay A Larger Dividend Than Last Year At CN¥0.2975

The board of Chaoju Eye Care Holdings Limited (HKG:2219) has announced that it will be paying its dividend of CN¥0.2975 on the 28th of June, an increased payment from last year's comparable dividend. This will take the annual payment to 6.0% of the stock price, which is above what most companies in the industry pay.

Check out our latest analysis for Chaoju Eye Care Holdings

Chaoju Eye Care Holdings' Payment Has Solid Earnings Coverage

While it is great to have a strong dividend yield, we should also consider whether the payment is sustainable. Based on the last payment, Chaoju Eye Care Holdings was quite comfortably earning enough to cover the dividend. This indicates that a lot of the earnings are being reinvested into the business, with the aim of fueling growth.

Looking forward, earnings per share is forecast to rise by 71.7% over the next year. If the dividend continues on this path, the payout ratio could be 51% by next year, which we think can be pretty sustainable going forward.

Chaoju Eye Care Holdings 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 dividend has gone from an annual total of CN¥0.0844 in 2022 to the most recent total annual payment of CN¥0.204. This means that it has been growing its distributions at 55% per annum over that time. Chaoju Eye Care Holdings has been growing its dividend quite rapidly, which is exciting. However, the short payment history makes us question whether this performance will persist across a full market cycle.

The Dividend Looks Likely To Grow

The company's investors will be pleased to have been receiving dividend income for some time. Chaoju Eye Care Holdings has impressed us by growing EPS at 15% per year over the past three years. Earnings are on the uptrend, and it is only paying a small portion of those earnings to shareholders.

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. All of these factors considered, we think this has solid potential as a dividend stock.

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. For example, we've picked out 1 warning sign for Chaoju Eye Care Holdings that investors should know about before committing capital to this stock. 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.