AIA Group (HKG:1299) Will Pay A Larger Dividend Than Last Year At $1.19

AIA Group Limited's (HKG:1299) dividend will be increasing from last year's payment of the same period to $1.19 on 14th of June. Even though the dividend went up, the yield is still quite low at only 2.6%.

See our latest analysis for AIA Group

AIA Group Doesn't Earn Enough To Cover Its Payments

It would be nice for the yield to be higher, but we should also check if higher levels of dividend payment would be sustainable. The last dividend was quite easily covered by AIA Group's earnings. This indicates that quite a large proportion of earnings is being invested back into the business.

Earnings per share is forecast to rise by 102.1% over the next year. Assuming the dividend continues along recent trends, we think the payout ratio could get very high, which probably can't continue without starting to put some pressure on the balance sheet.

AIA Group Has A Solid Track Record

The company has an extended history of paying stable dividends. Since 2014, the dividend has gone from $0.0548 total annually to $0.206. This means that it has been growing its distributions at 14% per annum over that time. It is good to see that there has been strong dividend growth, and that there haven't been any cuts for a long time.

We Could See AIA Group's Dividend Growing

Investors who have held shares in the company for the past few years will be happy with the dividend income they have received. AIA Group has impressed us by growing EPS at 6.6% per year over the past five 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.

AIA Group Looks Like A Great Dividend Stock

Overall, a dividend increase is always good, and we think that AIA Group is a strong income stock thanks to its track record and growing earnings. Distributions are quite easily covered by earnings, which are also being converted to cash flows. 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. Companies that are growing earnings tend to be the best dividend stocks over the long term. See what the 16 analysts we track are forecasting for AIA Group for free with public analyst estimates for the company. If you are a dividend investor, you might also want to look at our curated list of high yield dividend stocks.

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