Yahoo Finance Baker Technology's (SGX:BTP) Shareholders Will Receive A Bigger Dividend Than Last Year
Baker Technology Limited's (SGX:BTP) periodic dividend will be increasing on the 21st of May to SGD0.015, with investors receiving 50% more than last year's SGD0.01. The payment will take the dividend yield to 2.5%, which is in line with the average for the industry.
View our latest analysis for Baker Technology
Baker Technology's Earnings Easily Cover The Distributions
We aren't too impressed by dividend yields unless they can be sustained over time. However, prior to this announcement, Baker Technology's dividend was comfortably covered by both cash flow and earnings. This means that most of its earnings are being retained to grow the business.
Looking forward, EPS could fall by 13.8% if the company can't turn things around from the last few years. If the dividend continues along the path it has been on recently, we estimate the payout ratio could be 32%, which is definitely feasible to continue.
Dividend Volatility
While the company has been paying a dividend for a long time, it has cut the dividend at least once in the last 10 years. The annual payment during the last 10 years was SGD0.25 in 2014, and the most recent fiscal year payment was SGD0.015. The dividend has fallen 94% over that period. Declining dividends isn't generally what we look for as they can indicate that the company is running into some challenges.
The Dividend Has Limited Growth Potential
Given that the track record hasn't been stellar, we really want to see earnings per share growing over time. Baker Technology's EPS has fallen by approximately 14% per year during the past five years. A sharp decline in earnings per share is not great from from a dividend perspective. Even conservative payout ratios can come under pressure if earnings fall far enough.
Our Thoughts On Baker Technology's Dividend
In summary, while it's always good to see the dividend being raised, we don't think Baker Technology's payments are rock solid. The company is generating plenty of cash, which could maintain the dividend for a while, but the track record hasn't been great. We would be a touch cautious of relying on this stock primarily for the dividend income.
Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. As an example, we've identified 2 warning signs for Baker Technology that you should be aware of before investing. Is Baker Technology 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.
