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China Life Insurance Company Limited (HKG:2628) Looks Interesting, And It's About To Pay A Dividend

Simply Wall St · 06/27 22:51

China Life Insurance Company Limited (HKG:2628) stock is about to trade ex-dividend in four days. The ex-dividend date generally occurs two days before the record date, which is the day on which shareholders need to be on the company's books in order to receive a dividend. The ex-dividend date is an important date to be aware of as any purchase of the stock made on or after this date might mean a late settlement that doesn't show on the record date. Thus, you can purchase China Life Insurance's shares before the 2nd of July in order to receive the dividend, which the company will pay on the 21st of August.

The company's next dividend payment will be CN¥0.45 per share, and in the last 12 months, the company paid a total of CN¥0.65 per share. Looking at the last 12 months of distributions, China Life Insurance has a trailing yield of approximately 3.8% on its current stock price of HK$18.96. Dividends are a major contributor to investment returns for long term holders, but only if the dividend continues to be paid. So we need to investigate whether China Life Insurance can afford its dividend, and if the dividend could grow.

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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. China Life Insurance is paying out just 16% of its profit after tax, which is comfortably low and leaves plenty of breathing room in the case of adverse events.

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.

See our latest analysis for China Life Insurance

Click here to see the company's payout ratio, plus analyst estimates of its future dividends.

historic-dividend
SEHK:2628 Historic Dividend June 27th 2025

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 business enters a downturn and the dividend is cut, the company could see its value fall precipitously. Fortunately for readers, China Life Insurance's earnings per share have been growing at 15% a year 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 10 years, China Life Insurance has lifted its dividend by approximately 5.0% a year on average. Earnings per share have been growing much quicker than dividends, potentially because China Life Insurance is keeping back more of its profits to grow the business.

To Sum It Up

Is China Life Insurance an attractive dividend stock, or better left on the shelf? 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. In summary, China Life Insurance appears to have some promise as a dividend stock, and we'd suggest taking a closer look at it.

On that note, you'll want to research what risks China Life Insurance is facing. To that end, you should learn about the 2 warning signs we've spotted with China Life Insurance (including 1 which is concerning).

If you're in the market for strong dividend payers, we recommend checking our selection of top dividend stocks.