Ping An Insurance (Group) Company of China, Ltd. (HKG:2318) is about to trade ex-dividend in the next 3 days. You can purchase shares before the 8th of May in order to receive the dividend, which the company will pay on the 8th of June.
Ping An Insurance (Group) Company of China's next dividend payment will be HK$1.42 per share. Last year, in total, the company distributed HK$2.05 to shareholders. Based on the last year's worth of payments, Ping An Insurance (Group) Company of China stock has a trailing yield of around 2.8% on the current share price of HK$79.7. We love seeing companies pay a dividend, but it's also important to be sure that laying the golden eggs isn't going to kill our golden goose! So we need to check whether the dividend payments are covered, and if earnings are growing.
Dividends are typically paid from company earnings. If a company pays more in dividends than it earned in profit, then the dividend could be unsustainable. Ping An Insurance (Group) Company of China paid out a comfortable 28% of its profit last year.
When a company paid out less in dividends than it earned in profit, this generally suggests its dividend is affordable. The lower the % of its profit that it pays out, the greater the margin of safety for the dividend if the business enters a downturn.
Have Earnings And Dividends Been Growing?
Companies with consistently growing earnings per share generally make the best dividend stocks, as they usually find it easier to grow dividends per share. If earnings fall far enough, the company could be forced to cut its dividend. That's why it's comforting to see Ping An Insurance (Group) Company of China's earnings have been skyrocketing, up 24% per annum for the past five years.
The main way most investors will assess a company's dividend prospects is by checking the historical rate of dividend growth. In the last ten years, Ping An Insurance (Group) Company of China has lifted its dividend by approximately 30% a year on average. It's great to see earnings per share growing rapidly over several years, and dividends per share growing right along with it.
The Bottom Line
Has Ping An Insurance (Group) Company of China got what it takes to maintain its dividend payments? When companies are growing rapidly and retaining a majority of the profits within the business, it's usually a sign that reinvesting earnings creates more value than paying dividends to shareholders. Perhaps even more importantly - this can sometimes signal management is focused on the long term future of the business. Overall, Ping An Insurance (Group) Company of China looks like a promising dividend stock in this analysis, and we think it would be worth investigating further.
On that note, you'll want to research what risks Ping An Insurance (Group) Company of China is facing. Every company has risks, and we've spotted 2 warning signs for Ping An Insurance (Group) Company of China (of which 1 is significant!) you should know about.
We wouldn't recommend just buying the first dividend stock you see, though. Here's a list of interesting dividend stocks with a greater than 2% yield and an upcoming dividend.
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