Medialink Group's (HKG:2230) Upcoming Dividend Will Be Larger Than Last Year's

Medialink Group Limited (HKG:2230) has announced that it will be increasing its periodic dividend on the 16th of January to HK$0.012, which will be 10% higher than last year's comparable payment amount of HK$0.0109. This will take the annual payment to 5.7% of the stock price, which is above what most companies in the industry pay.

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Medialink Group's Future Dividend Projections Appear Well Covered By Earnings

We like to see robust dividend yields, but that doesn't matter if the payment isn't sustainable. Based on the last payment, Medialink Group was quite comfortably earning enough to cover the dividend. This means that a large portion of its earnings are being retained to grow the business.

Over the next year, EPS could expand by 9.0% if recent trends continue. If the dividend continues on this path, the payout ratio could be 50% by next year, which we think can be pretty sustainable going forward.

View our latest analysis for Medialink Group

Medialink Group's Dividend Has Lacked Consistency

Even in its relatively short history, the company has reduced the dividend at least once. Due to this, we are a little bit cautious about the dividend consistency over a full economic cycle. Since 2019, the dividend has gone from HK$0.013 total annually to HK$0.0137. Its dividends have grown at less than 1% per annum over this time frame. 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 Medialink Group's Dividend Growing

Given that the dividend has been cut in the past, we need to check if earnings are growing and if that might lead to stronger dividends in the future. We are encouraged to see that Medialink Group has grown earnings per share at 9.0% per year over the past five years. Earnings are on the uptrend, and it is only paying a small portion of those earnings to shareholders.

Medialink Group Looks Like A Great Dividend Stock

In summary, it is always positive to see the dividend being increased, and we are particularly pleased with its overall sustainability. Distributions are quite easily covered by earnings, which are also being converted to cash flows. All in all, this checks a lot of the boxes we look for when choosing an income stock.

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. For example, we've picked out 3 warning signs for Medialink Group that investors should know about before committing capital to this stock. Is Medialink Group not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

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