China Resources Pharmaceutical Group's (HKG:3320) Shareholders Will Receive A Bigger Dividend Than Last Year

China Resources Pharmaceutical Group Limited (HKG:3320) will increase its dividend from last year's comparable payment on the 21st of July to HK$0.16. This takes the annual payment to 2.6% of the current stock price, which is about average for the industry.

View our latest analysis for China Resources Pharmaceutical Group

China Resources Pharmaceutical Group's Dividend Is Well Covered By Earnings

Unless the payments are sustainable, the dividend yield doesn't mean too much. Before making this announcement, China Resources Pharmaceutical Group was easily earning enough to 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 42.0%. If the dividend continues on this path, the payout ratio could be 18% by next year, which we think can be pretty sustainable going forward.

China Resources Pharmaceutical Group Doesn't Have A Long Payment History

China Resources Pharmaceutical Group's dividend has been pretty stable for a little while now, but we will continue to be cautious until it has been demonstrated for a few more years. Since 2017, the annual payment back then was HK$0.09, compared to the most recent full-year payment of HK$0.16. This means that it has been growing its distributions at 10% per annum over that time. The dividend has been growing rapidly, however with such a short payment history we can't know for sure if payment can continue to grow over the long term, so caution may be warranted.

The Dividend's Growth Prospects Are Limited

Investors could be attracted to the stock based on the quality of its payment history. However, China Resources Pharmaceutical Group has only grown its earnings per share at 3.6% per annum over the past five years. If China Resources Pharmaceutical Group is struggling to find viable investments, it always has the option to increase its payout ratio to pay more to shareholders.

Our Thoughts On China Resources Pharmaceutical Group's Dividend

Overall, this is a reasonable dividend, and it being raised is an added bonus. While the payout ratios are a good sign, we are less enthusiastic about the company's dividend record. The payment isn't stellar, but it could make a decent addition to a dividend portfolio.

It's important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. Earnings growth generally bodes well for the future value of company dividend payments. See if the 8 China Resources Pharmaceutical Group analysts we track are forecasting continued growth with our free report on analyst estimates for the company. Is China Resources Pharmaceutical Group not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

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