Hansoh Pharmaceutical Group's (HKG:3692) Upcoming Dividend Will Be Larger Than Last Year's

Hansoh Pharmaceutical Group Company Limited's (HKG:3692) dividend will be increasing from last year's payment of the same period to CN¥0.0707 on 28th of September. Even though the dividend went up, the yield is still quite low at only 1.4%.

Check out our latest analysis for Hansoh Pharmaceutical Group

Hansoh Pharmaceutical Group's Payment Has Solid Earnings Coverage

While yield is important, another factor to consider about a company's dividend is whether the current payout levels are feasible. Before making this announcement, Hansoh Pharmaceutical Group was easily earning enough to cover the dividend. As a result, a large proportion of what it earned was being reinvested back into the business.

Over the next year, EPS is forecast to expand by 37.1%. Assuming the dividend continues along recent trends, we think the payout ratio could be 20% by next year, which is in a pretty sustainable range.

Hansoh Pharmaceutical Group Is Still Building Its Track Record

The dividend has been pretty stable looking back, but the company hasn't been paying one for very long. This makes it tough to judge how it would fare through a full economic cycle. Since 2021, the dividend has gone from CN¥0.0651 total annually to CN¥0.131. This means that it has been growing its distributions at 42% per annum over that time. We're not overly excited about the relatively short history of dividend payments, however the dividend is growing at a nice rate and we might take a closer look.

The Dividend's Growth Prospects Are Limited

Investors who have held shares in the company for the past few years will be happy with the dividend income they have received. Unfortunately, Hansoh Pharmaceutical Group's earnings per share has been essentially flat over the past three years, which means the dividend may not be increased each year. Earnings growth is slow, but on the plus side, the dividend payout ratio is low and dividends could grow faster than earnings, if the company decides to increase its payout ratio.

In Summary

Overall, it's great to see the dividend being raised and that it is still in a sustainable range. While the payout ratios are a good sign, we are less enthusiastic about the company's dividend record. This looks like it could be a good dividend stock going forward, but we would note that the payout ratio has been at higher levels in the past so it could happen again.

Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. However, there are other things to consider for investors when analysing stock performance. Earnings growth generally bodes well for the future value of company dividend payments. See if the 19 Hansoh Pharmaceutical Group analysts we track are forecasting continued growth with our free report on analyst estimates for the company. Is Hansoh Pharmaceutical Group not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

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