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China Lesso Group Holdings Limited (HKG:2128) is about to trade ex-dividend in the next 3 days. This means that investors who purchase shares on or after the 6th of September will not receive the dividend, which will be paid on the 23rd of September.
China Lesso Group Holdings's next dividend payment will be CN¥0.12 per share. Last year, in total, the company distributed CN¥0.34 to shareholders. Calculating the last year's worth of payments shows that China Lesso Group Holdings has a trailing yield of 5.0% on the current share price of HK$7.53. If you buy this business for its dividend, you should have an idea of whether China Lesso Group Holdings's dividend is reliable and sustainable. So we need to check whether the dividend payments are covered, and if earnings are growing.
See our latest analysis for China Lesso Group Holdings
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. That's why it's good to see China Lesso Group Holdings paying out a modest 32% of its earnings. A useful secondary check can be to evaluate whether China Lesso Group Holdings generated enough free cash flow to afford its dividend. The good news is it paid out just 23% of its free cash flow in the last year.
It's positive to see that China Lesso Group Holdings's dividend is covered by both profits and cash flow, since this is generally a sign that the dividend is sustainable, and a lower payout ratio usually suggests a greater margin of safety before the dividend gets cut.
Click here to see the company's payout ratio, plus analyst estimates of its future dividends.
Have Earnings And Dividends Been Growing?
Businesses with strong growth prospects usually make the best dividend payers, because it's easier to grow dividends when earnings per share are improving. If business enters a downturn and the dividend is cut, the company could see its value fall precipitously. Fortunately for readers, China Lesso Group Holdings's earnings per share have been growing at 13% a year for the past five years. Earnings per share have been growing rapidly and the company is retaining a majority of its earnings within the business. This will make it easier to fund future growth efforts and we think this is an attractive combination - plus the dividend can always be increased later.
Many investors will assess a company's dividend performance by evaluating how much the dividend payments have changed over time. China Lesso Group Holdings has delivered an average of 16% per year annual increase in its dividend, based on the past 8 years of dividend payments. It's exciting to see that both earnings and dividends per share have grown rapidly over the past few years.