Towngas Smart Energy (HKG:1083) Is Paying Out A Larger Dividend Than Last Year

Towngas Smart Energy Company Limited (HKG:1083) has announced that it will be increasing its dividend from last year's comparable payment on the 12th of July to HK$0.16. This takes the annual payment to 5.3% of the current stock price, which is about average for the industry.

View our latest analysis for Towngas Smart Energy

Towngas Smart Energy's Payment Has Solid Earnings Coverage

We like to see a healthy dividend yield, but that is only helpful to us if the payment can continue. However, Towngas Smart Energy's 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 15.4%. If the dividend continues along recent trends, we estimate the payout ratio will be 32%, which is in the range that makes us comfortable with the sustainability of the dividend.

Towngas Smart Energy Has A Solid Track Record

The company has an extended history of paying stable dividends. Since 2014, the annual payment back then was HK$0.08, compared to the most recent full-year payment of HK$0.16. This means that it has been growing its distributions at 7.2% per annum over that time. The dividend has been growing very nicely for a number of years, and has given its shareholders some nice income in their portfolios.

Dividend Growth May Be Hard To Achieve

The company's investors will be pleased to have been receiving dividend income for some time. Although it's important to note that Towngas Smart Energy's earnings per share has basically not grown from where it was five years ago, which could erode the purchasing power of the dividend over time. If Towngas Smart Energy is struggling to find viable investments, it always has the option to increase its payout ratio to pay more to shareholders.

We Really Like Towngas Smart Energy's Dividend

Overall, we think this could be an attractive income stock, and it is only getting better by paying a higher dividend this year. Distributions are quite easily covered by earnings, which are also being converted to cash flows. Taking this all into consideration, this looks like it could be a good dividend opportunity.

Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. To that end, Towngas Smart Energy has 2 warning signs (and 1 which makes us a bit uncomfortable) we think you should know about. Is Towngas Smart Energy 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.