Yahoo Finance Tat Seng Packaging Group (SGX:T12) Is Reducing Its Dividend To SGD0.02
Tat Seng Packaging Group Ltd (SGX:T12) has announced that on 24th of May, it will be paying a dividend ofSGD0.02, which a reduction from last year's comparable dividend. However, the dividend yield of 6.5% is still a decent boost to shareholder returns.
Check out our latest analysis for Tat Seng Packaging Group
Tat Seng Packaging Group's Payment Has Solid Earnings Coverage
Impressive dividend yields are good, but this doesn't matter much if the payments can't be sustained. However, Tat Seng Packaging Group's earnings easily cover the dividend. This means that most of what the business earns is being used to help it grow.
EPS is set to fall by 0.5% over the next 12 months if recent trends continue. If the dividend continues along the path it has been on recently, we estimate the payout ratio could be 41%, which is definitely feasible to continue.
Dividend Volatility
Although the company has a long dividend history, it has been cut at least once in the last 10 years. Since 2014, the dividend has gone from SGD0.02 total annually to SGD0.045. This works out to be a compound annual growth rate (CAGR) of approximately 8.4% a year over that time. We like to see dividends have grown at a reasonable rate, but with at least one substantial cut in the payments, we're not certain this dividend stock would be ideal for someone intending to live on the income.
Dividend Growth May Be Hard To Achieve
With a relatively unstable dividend, it's even more important to see if earnings per share is growing. However, Tat Seng Packaging Group's EPS was effectively flat over the past five years, which could stop the company from paying more every year.
Our Thoughts On Tat Seng Packaging Group's Dividend
In summary, dividends being cut isn't ideal, however it can bring the payment into a more sustainable range. The company is generating plenty of cash, which could maintain the dividend for a while, but the track record hasn't been great. We don't think Tat Seng Packaging Group is a great stock to add to your portfolio if income is your focus.
It's important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. However, there are other things to consider for investors when analysing stock performance. As an example, we've identified 2 warning signs for Tat Seng Packaging Group that you should be aware of before investing. Is Tat Seng Packaging Group 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.
