Uni-Asia Group (SGX:CHJ) Will Pay A Larger Dividend Than Last Year At $0.065

The board of Uni-Asia Group Limited (SGX:CHJ) has announced that it will be paying its dividend of $0.065 on the 30th of September, an increased payment from last year's comparable dividend. This makes the dividend yield 5.9%, which is above the industry average.

Check out our latest analysis for Uni-Asia Group

Uni-Asia Group's Payment Has Solid Earnings Coverage

Impressive dividend yields are good, but this doesn't matter much if the payments can't be sustained. Before making this announcement, Uni-Asia Group was easily earning enough to cover the dividend. This means that most of its earnings are being retained to grow the business.

Over the next year, EPS is forecast to fall by 33.6%. Assuming the dividend continues along recent trends, we believe the payout ratio could be 53%, which we are pretty comfortable with and we think is feasible on an earnings basis.

Uni-Asia Group's Dividend Has Lacked Consistency

It's comforting to see that Uni-Asia Group has been paying a dividend for a number of years now, however it has been cut at least once in that time. This suggests that the dividend might not be the most reliable. Since 2013, the dividend has gone from $0.026 total annually to $0.0471. This means that it has been growing its distributions at 6.9% per annum over that time. A reasonable rate of dividend growth is good to see, but we're wary that the dividend history is not as solid as we'd like, having been cut at least once.

The Dividend Looks Likely To Grow

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. Uni-Asia Group has seen EPS rising for the last five years, at 32% per annum. Earnings per share is growing at a solid clip, and the payout ratio is low which we think is an ideal combination in a dividend stock as the company can quite easily raise the dividend in the future.

Uni-Asia Group Looks Like A Great Dividend Stock

Overall, a dividend increase is always good, and we think that Uni-Asia Group is a strong income stock thanks to its track record and growing earnings. The company is generating plenty of cash, and the earnings also quite easily cover the distributions. If earnings do fall over the next 12 months, the dividend could be buffeted a little bit, but we don't think it should cause too much of a problem in the long term. 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. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. Just as an example, we've come across 5 warning signs for Uni-Asia Group you should be aware of, and 1 of them is concerning. Is Uni-Asia Group not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

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