China Taiping Insurance Holdings (HKG:966) Is Paying Out A Larger Dividend Than Last Year

China Taiping Insurance Holdings Company Limited's (HKG:966) dividend will be increasing to HK$0.46 on 21st of July. This makes the dividend yield about the same as the industry average at 5.0%.

Check out our latest analysis for China Taiping Insurance Holdings

China Taiping Insurance Holdings' Payment Has Solid Earnings Coverage

We aren't too impressed by dividend yields unless they can be sustained over time. However, China Taiping Insurance Holdings' earnings easily cover the dividend. This means that most of what the business earns is being used to help it grow.

The next year is set to see EPS grow by 9.3%. If the dividend continues on this path, the payout ratio could be 28% by next year, which we think can be pretty sustainable going forward.

China Taiping Insurance Holdings Is Still Building Its Track Record

It is great to see that China Taiping Insurance Holdings has been paying a stable dividend for a number of years now, however we want to be a bit cautious about whether this will remain true through a full economic cycle. Since 2017, the first annual payment was HK$0.10, compared to the most recent full-year payment of HK$0.46. This implies that the company grew its distributions at a yearly rate of about 36% over that duration. 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. We are encouraged to see that China Taiping Insurance Holdings has grown earnings per share at 10% per year over the past five years. China Taiping Insurance Holdings definitely has the potential to grow its dividend in the future with earnings on an uptrend and a low payout ratio.

China Taiping Insurance Holdings Looks Like A Great Dividend Stock

Overall, a dividend increase is always good, and we think that China Taiping Insurance 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. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. For instance, we've picked out 1 warning sign for China Taiping Insurance Holdings that investors should take into consideration. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.

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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.