EuroEyes International Eye Clinic (HKG:1846) Is Due To Pay A Dividend Of HK$0.0315

The board of EuroEyes International Eye Clinic Limited (HKG:1846) has announced that it will pay a dividend of HK$0.0315 per share on the 17th of October. This means that the dividend yield is 1.9%, which is a bit low when comparing to other companies in the industry.

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EuroEyes International Eye Clinic's Payment Could Potentially Have Solid Earnings Coverage

Even a low dividend yield can be attractive if it is sustained for years on end. Before making this announcement, EuroEyes International Eye Clinic 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.

The next year is set to see EPS grow by 26.3%. Assuming the dividend continues along recent trends, we think the payout ratio could be 22% by next year, which is in a pretty sustainable range.

View our latest analysis for EuroEyes International Eye Clinic

EuroEyes International Eye Clinic's Dividend Has Lacked Consistency

The track record isn't the longest, but we are already seeing a bit of instability in the payments. Since 2021, the annual payment back then was HK$0.0299, compared to the most recent full-year payment of HK$0.0594. This means that it has been growing its distributions at 19% per annum over that time. Dividends have grown rapidly over this time, but with cuts in the past we are not certain that this stock will be a reliable source of income in the future.

The Dividend Looks Likely To Grow

Growing earnings per share could be a mitigating factor when considering the past fluctuations in the dividend. EuroEyes International Eye Clinic has impressed us by growing EPS at 50% per year over the past five years. Rapid earnings growth and a low payout ratio suggest this company has been effectively reinvesting in its business. Should that continue, this company could have a bright future.

We Really Like EuroEyes International Eye Clinic's Dividend

It is generally not great to see the dividend being cut, but we don't think this should happen much if at all in the future given that EuroEyes International Eye Clinic has the makings of a solid income stock moving forward. By reducing the dividend, pressure will be taken off the balance sheet, which could help the dividend to be consistent in the future. Taking this all into consideration, this looks like it could be a good dividend opportunity.

It's important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. However, there are other things to consider for investors when analysing stock performance. For instance, we've picked out 1 warning sign for EuroEyes International Eye Clinic that investors should take into consideration. Is EuroEyes International Eye Clinic not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

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