Charmacy Pharmaceutical (HKG:2289) Will Pay A Larger Dividend Than Last Year At CN¥0.489

Charmacy Pharmaceutical Co., Ltd.'s (HKG:2289) dividend will be increasing from last year's payment of the same period to CN¥0.489 on 11th of July. This will take the annual payment to 6.4% of the stock price, which is above what most companies in the industry pay.

Trump has pledged to "unleash" American oil and gas and these 15 US stocks have developments that are poised to benefit.

Charmacy Pharmaceutical's Projections Indicate Future Payments May Be Unsustainable

Impressive dividend yields are good, but this doesn't matter much if the payments can't be sustained. Before this announcement, Charmacy Pharmaceutical was paying out 91% of earnings, but a comparatively small 54% of free cash flows. This leaves plenty of cash for reinvestment into the business.

EPS is set to grow by 5.8% over the next year if recent trends continue. If the dividend continues on its recent course, the payout ratio in 12 months could be 99%, which is a bit high and could start applying pressure to the balance sheet.

View our latest analysis for Charmacy Pharmaceutical

Charmacy Pharmaceutical's Dividend Has Lacked Consistency

Looking back, Charmacy Pharmaceutical's dividend hasn't been particularly consistent. This suggests that the dividend might not be the most reliable. Since 2016, the dividend has gone from CN¥0.40 total annually to CN¥0.45. This works out to be a compound annual growth rate (CAGR) of approximately 1.3% a year over that time. We're glad to see the dividend has risen, but with a limited rate of growth and fluctuations in the payments the total shareholder return may be limited.

We Could See Charmacy Pharmaceutical's Dividend Growing

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. We are encouraged to see that Charmacy Pharmaceutical has grown earnings per share at 5.8% per year over the past five years. EPS has been growing at a reasonable rate, although with most of the profits being paid out to shareholders, growth prospects could be more limited in the future.

Our Thoughts On Charmacy Pharmaceutical's Dividend

In summary, while it's always good to see the dividend being raised, we don't think Charmacy Pharmaceutical's payments are rock solid. In the past, the payments have been unstable, but over the short term the dividend could be reliable, with the company generating enough cash to cover it. This company is not in the top tier of income providing stocks.

Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. Just as an example, we've come across 2 warning signs for Charmacy Pharmaceutical you should be aware of, and 1 of them is concerning. Is Charmacy Pharmaceutical not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.