Atour Lifestyle Holdings Limited (NASDAQ:ATAT) has announced that it will be increasing its dividend from last year’s comparable payment on the 30th of September to CN¥0.40. Based on this payment, the dividend yield for the company will be 2.4%, which is fairly typical for the industry.
View our latest analysis for Atour Lifestyle Holdings
Atour Lifestyle Holdings’ Dividend Is Well Covered By Earnings
Unless the payments are sustainable, the dividend yield doesn’t mean too much. Based on the last payment, Atour Lifestyle Holdings was quite comfortably earning enough to cover the dividend. This indicates that quite a large proportion of earnings is being invested back into the business.
Looking forward, earnings per share is forecast to rise by 76.4% over the next year. If the dividend continues on this path, the payout ratio could be 3.0% by next year, which we think can be pretty sustainable going forward.
Atour Lifestyle Holdings Doesn’t Have A Long Payment History
It’s not possible for us to make a backward looking judgement just based on a short payment history. This doesn’t mean that the company can’t pay a good dividend, but just that we want to wait until it can prove itself.
The Dividend Looks Likely To Grow
Some investors will be chomping at the bit to buy some of the company’s stock based on its dividend history. It’s encouraging to see that Atour Lifestyle Holdings has been growing its earnings per share at 127% a year over the past five years. The company doesn’t have any problems growing, despite returning a lot of capital to shareholders, which is a very nice combination for a dividend stock to have.
We Really Like Atour Lifestyle Holdings’ Dividend
Overall, a dividend increase is always good, and we think that Atour Lifestyle Holdings is a strong income stock thanks to its track record and growing earnings. Earnings are easily covering distributions, and the company is generating plenty of cash. All in all, this checks a lot of the boxes we look for when choosing an income stock.
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. As an example, we’ve identified 2 warning signs for Atour Lifestyle Holdings that you should be aware of before investing. Is Atour Lifestyle Holdings not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.