Kangji Medical Holdings (HKG:9997) Will Pay A Larger Dividend Than Last Year At HK$0.17

The board of Kangji Medical Holdings Limited (HKG:9997) has announced that it will be increasing its dividend on the 28th of June to HK$0.17. The announced payment will take the dividend yield to 2.4%, which is in line with the average for the industry.

Check out our latest analysis for Kangji Medical Holdings

Kangji Medical Holdings' Dividend Is Well Covered By Earnings

Solid dividend yields are great, but they only really help us if the payment is sustainable. However, prior to this announcement, Kangji Medical Holdings' dividend was comfortably covered by both cash flow and earnings. As a result, a large proportion of what it earned was being reinvested back into the business.

Over the next year, EPS is forecast to expand by 34.8%. Assuming the dividend continues along recent trends, we think the payout ratio could be 35% by next year, which is in a pretty sustainable range.

Kangji Medical Holdings Is Still Building Its Track Record

The company hasn't been paying a dividend for very long at all, so we can't really make a judgement on how stable the dividend has been. This doesn't mean that the company can't pay a good dividend, but just that we want to wait until it can prove itself.

The Dividend Looks Likely To Grow

Some investors will be chomping at the bit to buy some of the company's stock based on its dividend history. Kangji Medical Holdings will be very happy to have seen its EPS grow by 42% in just the last 12 months. We always like to see numbers like these going up, but we don't expect them to shoot up forever, especially as the company grows. Earnings have been growing rapidly, and with a low payout ratio we think that the company could turn out to be a great dividend stock. We do note though, one year is too short a time to be drawing strong conclusions about a company's future prospects.

Kangji Medical Holdings Looks Like A Great Dividend Stock

Overall, a dividend increase is always good, and we think that Kangji Medical 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 Kangji Medical Holdings that investors should know about before committing capital to this stock. Is Kangji Medical 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.