Yahoo Finance SUTL Enterprise (SGX:BHU) Has Announced A Dividend Of SGD0.05
SUTL Enterprise Limited's (SGX:BHU) investors are due to receive a payment of SGD0.05 per share on 12th of June. This makes the dividend yield 7.4%, which will augment investor returns quite nicely.
Check out our latest analysis for SUTL Enterprise
SUTL Enterprise's Payment Has Solid Earnings Coverage
If the payments aren't sustainable, a high yield for a few years won't matter that much. Based on the last payment, SUTL Enterprise was quite comfortably earning enough to cover the dividend. This means that a large portion of its earnings are being retained to grow the business.
If the trend of the last few years continues, EPS will grow by 6.6% over the next 12 months. If the dividend continues along recent trends, we estimate the payout ratio will be 58%, which is in the range that makes us comfortable with the sustainability of the dividend.
SUTL Enterprise Doesn't Have A Long Payment History
The dividend's track record has been pretty solid, but with only 7 years of history we want to see a few more years of history before making any solid conclusions. The annual payment during the last 7 years was SGD0.02 in 2017, and the most recent fiscal year payment was SGD0.05. This works out to be a compound annual growth rate (CAGR) of approximately 14% a year over that time. It is always nice to see strong dividend growth, but with such a short payment history we wouldn't be inclined to rely on it until a longer track record can be developed.
The Dividend Has Growth Potential
The company's investors will be pleased to have been receiving dividend income for some time. SUTL Enterprise has impressed us by growing EPS at 6.6% per year over the past five years. Earnings are on the uptrend, and it is only paying a small portion of those earnings to shareholders.
In Summary
In summary, we are pleased with the dividend remaining consistent, and we think there is a good chance of this continuing in the future. While the payout ratios are a good sign, we are less enthusiastic about the company's dividend record. The dividend looks okay, but there have been some issues in the past, so we would be a little bit cautious.
Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. Taking the debate a bit further, we've identified 2 warning signs for SUTL Enterprise that investors need to be conscious of moving forward. If you are a dividend investor, you might also want to look at our curated list of high yield 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.
