Yahoo Finance There's A Lot To Like About Sin Heng Heavy Machinery's (SGX:BKA) Upcoming S$0.05 Dividend
Sin Heng Heavy Machinery Limited (SGX:BKA) is about to trade ex-dividend in the next 3 days. The ex-dividend date is one business day before the record date, which is the cut-off date for shareholders to be present on the company's books to be eligible for a dividend payment. It is important to be aware of the ex-dividend date because any trade on the stock needs to have been settled on or before the record date. Thus, you can purchase Sin Heng Heavy Machinery's shares before the 3rd of May in order to receive the dividend, which the company will pay on the 13th of May.
The company's upcoming dividend is S$0.05 a share, following on from the last 12 months, when the company distributed a total of S$0.05 per share to shareholders. Based on the last year's worth of payments, Sin Heng Heavy Machinery has a trailing yield of 9.4% on the current stock price of S$0.53. Dividends are an important source of income to many shareholders, but the health of the business is crucial to maintaining those dividends. That's why we should always check whether the dividend payments appear sustainable, and if the company is growing.
See our latest analysis for Sin Heng Heavy Machinery
If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. Sin Heng Heavy Machinery has a low and conservative payout ratio of just 14% of its income after tax. A useful secondary check can be to evaluate whether Sin Heng Heavy Machinery generated enough free cash flow to afford its dividend. The good news is it paid out just 22% of its free cash flow in the last year.
It's positive to see that Sin Heng Heavy Machinery's dividend is covered by both profits and cash flow, since this is generally a sign that the dividend is sustainable, and a lower payout ratio usually suggests a greater margin of safety before the dividend gets cut.
Click here to see how much of its profit Sin Heng Heavy Machinery paid out over the last 12 months.
Have Earnings And Dividends Been Growing?
Businesses with strong growth prospects usually make the best dividend payers, because it's easier to grow dividends when earnings per share are improving. If business enters a downturn and the dividend is cut, the company could see its value fall precipitously. It's encouraging to see Sin Heng Heavy Machinery has grown its earnings rapidly, up 70% a year for the past five years. Sin Heng Heavy Machinery earnings per share have been sprinting ahead like the Road Runner at a track and field day; scarcely stopping even for a cheeky "beep-beep". We also like that it is reinvesting most of its profits in its business.'
Many investors will assess a company's dividend performance by evaluating how much the dividend payments have changed over time. Sin Heng Heavy Machinery has delivered 2.3% dividend growth per year on average over the past 10 years. Earnings per share have been growing much quicker than dividends, potentially because Sin Heng Heavy Machinery is keeping back more of its profits to grow the business.
To Sum It Up
Is Sin Heng Heavy Machinery an attractive dividend stock, or better left on the shelf? Sin Heng Heavy Machinery has grown its earnings per share while simultaneously reinvesting in the business. Unfortunately it's cut the dividend at least once in the past 10 years, but the conservative payout ratio makes the current dividend look sustainable. It's a promising combination that should mark this company worthy of closer attention.
In light of that, while Sin Heng Heavy Machinery has an appealing dividend, it's worth knowing the risks involved with this stock. Case in point: We've spotted 2 warning signs for Sin Heng Heavy Machinery you should be aware of.
Generally, we wouldn't recommend just buying the first dividend stock you see. Here's a curated list of interesting stocks that are strong dividend payers.
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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.
