Yahoo Finance Singapore Land Group (SGX:U06) Is Increasing Its Dividend To SGD0.04
Singapore Land Group Limited (SGX:U06) will increase its dividend on the 24th of May to SGD0.04, which is 14% higher than last year's payment from the same period of SGD0.035. Despite this raise, the dividend yield of 2.2% is only a modest boost to shareholder returns.
See our latest analysis for Singapore Land Group
Singapore Land Group's Payment Has Solid Earnings Coverage
It would be nice for the yield to be higher, but we should also check if higher levels of dividend payment would be sustainable. Before making this announcement, Singapore Land Group was easily earning enough to cover the dividend. This means that most of what the business earns is being used to help it grow.
Unless the company can turn things around, EPS could fall by 3.1% over the next year. If the dividend continues along the path it has been on recently, we estimate the payout ratio could be 22%, which is definitely feasible to continue.
Singapore Land Group Has A Solid Track Record
The company has an extended history of paying stable dividends. Since 2014, the dividend has gone from SGD0.03 total annually to SGD0.04. This works out to be a compound annual growth rate (CAGR) of approximately 2.9% a year over that time. Slow and steady dividend growth might not sound that exciting, but dividends have been stable for ten years, which we think makes this a fairly attractive offer.
The Dividend's Growth Prospects Are Limited
Some investors will be chomping at the bit to buy some of the company's stock based on its dividend history. Unfortunately things aren't as good as they seem. Singapore Land Group has seen earnings per share falling at 3.1% per year over the last five years. If the company is making less over time, it naturally follows that it will also have to pay out less in dividends.
In Summary
In summary, it's great to see that the company can raise the dividend and keep it in a sustainable range. The earnings coverage is acceptable for now, but with earnings on the decline we would definitely keep an eye on the payout ratio. This looks like it could be a good dividend stock going forward, but we would note that the payout ratio has been at higher levels in the past so it could happen again.
Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. Case in point: We've spotted 3 warning signs for Singapore Land Group (of which 1 is a bit unpleasant!) you should know about. Is Singapore Land 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.
