Some investors rely on dividends for growing their wealth, and if you're one of those dividend sleuths, you might be intrigued to know that Tai Sang Land Development Limited (HKG:89) is about to go ex-dividend in just 4 days. You will need to purchase shares before the 9th of September to receive the dividend, which will be paid on the 26th of September.
Tai Sang Land Development's next dividend payment will be HK$0.10 per share, on the back of last year when the company paid a total of HK$0.24 to shareholders. Last year's total dividend payments show that Tai Sang Land Development has a trailing yield of 4.9% on the current share price of HK$4.9. If you buy this business for its dividend, you should have an idea of whether Tai Sang Land Development's dividend is reliable and sustainable. So we need to check whether the dividend payments are covered, and if earnings are growing.
Dividends are typically paid out of company income, so if a company pays out more than it earned, its dividend is usually at a higher risk of being cut. That's why it's good to see Tai Sang Land Development paying out a modest 27% of its earnings. Yet cash flow is typically more important than profit for assessing dividend sustainability, so we should always check if the company generated enough cash to afford its dividend. Fortunately, it paid out only 36% of its free cash flow in the past year.
It's encouraging to see that the dividend is covered by both profit and cash flow. This generally suggests the dividend is sustainable, as long as earnings don't drop precipitously.
Have Earnings And Dividends Been Growing?
When earnings decline, dividend companies become much harder to analyse and own safely. If business enters a downturn and the dividend is cut, the company could see its value fall precipitously. Tai Sang Land Development's earnings per share have fallen at approximately 10% a year over the previous 5 years. Such a sharp decline casts doubt on the future sustainability of the dividend.
Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. Tai Sang Land Development has delivered an average of 6.3% per year annual increase in its dividend, based on the past 10 years of dividend payments.
Is Tai Sang Land Development worth buying for its dividend? Tai Sang Land Development has comfortably low cash and profit payout ratios, which may mean the dividend is sustainable even in the face of a sharp decline in earnings per share. Still, we consider declining earnings to be a warning sign. Overall, it's hard to get excited about Tai Sang Land Development from a dividend perspective.
Curious about whether Tai Sang Land Development has been able to consistently generate growth? Here's a chart of its historical revenue and earnings growth.
If you're in the market for dividend stocks, we recommend checking our list of top dividend stocks with a greater than 2% yield and an upcoming dividend.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at email@example.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.