Uju Holding's (HKG:1948) Shareholders Will Receive A Bigger Dividend Than Last Year

Uju Holding Limited (HKG:1948) will increase its dividend from last year's comparable payment on the 3rd of July to CN¥0.05. This takes the annual payment to 3.5% of the current stock price, which unfortunately is below what the industry is paying.

See our latest analysis for Uju Holding

Uju Holding's Earnings Easily Cover The Distributions

If it is predictable over a long period, even low dividend yields can be attractive. Before making this announcement, Uju Holding was easily earning enough to cover the dividend. This means that most of what the business earns is being used to help it grow.

If the company can't turn things around, EPS could fall by 64.8% over the next year. Assuming the dividend continues along recent trends, we think the payout ratio could reach 94%, which is definitely on the higher side.

Uju Holding's Dividend Has Lacked Consistency

Looking back, the dividend has been unstable but with a relatively short history, we think it may be a bit early to draw conclusions about long term dividend sustainability. Since 2022, the annual payment back then was CN¥0.0811, compared to the most recent full-year payment of CN¥0.0462. Dividend payments have fallen sharply, down 43% over that time. A company that decreases its dividend over time generally isn't what we are looking for.

The Dividend Has Limited Growth Potential

Given that the track record hasn't been stellar, we really want to see earnings per share growing over time. Uju Holding's EPS has fallen by approximately 65% per year during the past five years. Dividend payments are likely to come under some pressure unless EPS can pull out of the nosedive it is in.

In Summary

Overall, we always like to see the dividend being raised, but we don't think Uju Holding will make a great income stock. The company is generating plenty of cash, which could maintain the dividend for a while, but the track record hasn't been great. Overall, we don't think this company has the makings of a good income stock.

It's important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. For instance, we've picked out 1 warning sign for Uju Holding that investors should take into consideration. Is Uju Holding 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.