Shanghai Gench Education Group Limited (HKG:1525) will pay a dividend of CN¥0.10 on the 17th of June. This means the annual payment is 9.0% of the current stock price, which is above the average for the industry.

Shanghai Gench Education Group's Future Dividend Projections Appear Well Covered By Earnings

We like to see robust dividend yields, but that doesn't matter if the payment isn't sustainable. However, Shanghai Gench Education Group's earnings easily cover the dividend. This means that most of its earnings are being retained to grow the business.

Looking forward, earnings per share could rise by 6.2% over the next year if the trend from the last few years continues. If the dividend continues along recent trends, we estimate the payout ratio will be 33%, which is in the range that makes us comfortable with the sustainability of the dividend.

View our latest analysis for Shanghai Gench Education Group

Shanghai Gench Education Group Is Still Building Its Track Record

The company has maintained a consistent dividend for a few years now, but we would like to see a longer track record before relying on it. The dividend has gone from an annual total of CN¥0.145 in 2021 to the most recent total annual payment of CN¥0.18. This means that it has been growing its distributions at 5.5% per annum over that time. Shanghai Gench Education Group has a nice track record of dividend growth but we would wait until we see a longer track record before getting too confident.

We Could See Shanghai Gench Education Group's Dividend Growing

Investors could be attracted to the stock based on the quality of its payment history. We are encouraged to see that Shanghai Gench Education Group has grown earnings per share at 6.2% per year over the past five years. With a decent amount of growth and a low payout ratio, we think this bodes well for Shanghai Gench Education Group's prospects of growing its dividend payments in the future.

Our Thoughts On Shanghai Gench Education Group's Dividend

In summary, we are pleased with the dividend remaining consistent, and we think there is a good chance of this continuing in the future. While the payout ratios are a good sign, we are less enthusiastic about the company's dividend record. The dividend looks okay, but there have been some issues in the past, so we would be a little bit cautious.

Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. However, there are other things to consider for investors when analysing stock performance. Are management backing themselves to deliver performance? Check their shareholdings in Shanghai Gench Education Group in our latest insider ownership analysis. If you are a dividend investor, you might also want to look at our curated list of high yield dividend stocks.

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