Investors who want to cash in on Singapore Press Holdings Limited’s (SGX:T39) upcoming dividend of S$0.07 per share have only 3 days left to buy the shares before its ex-dividend date, 06 December 2018, in time for dividends payable on the 21 December 2018. Investors looking for higher income-generating stocks to add to their portfolio should keep reading, as I take a deeper dive into Singapore Press Holdings’s latest financial data to analyse its dividend attributes.
View our latest analysis for Singapore Press Holdings
5 questions to ask before buying a dividend stock
If you are a dividend investor, you should always assess these five key metrics:
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Is its annual yield among the top 25% of dividend-paying companies?
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Does it consistently pay out dividends without missing a payment of significantly cutting payout?
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Has it increased its dividend per share amount over the past?
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Is its earnings sufficient to payout dividend at the current rate?
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Based on future earnings growth, will it be able to continue to payout dividend at the current rate?
How well does Singapore Press Holdings fit our criteria?
The current trailing twelve-month payout ratio for the stock is 52%, which means that the dividend is covered by earnings. In the near future, analysts are predicting a higher payout ratio of 101%, leading to a dividend yield of around 5.2%. However, EPS is forecasted to fall to SGD0.13 in the upcoming year. Therefore, although payout is expected to increase, the fall in earnings may not equate to higher dividend income. This also brings about uncertainty around the sustainability of the payout ratio.
If you want to dive deeper into the sustainability of a certain payout ratio, you may wish to consider the cash flow of the business. A business with strong cash flow can sustain a higher divided payout ratio than a company with weak cash flow.
Reliablity is an important factor for dividend stocks, particularly for income investors who want a strong track record of payment and a positive outlook for future payout. Not only have dividend payouts from Singapore Press Holdings fallen over the past 10 years, it has also been highly volatile during this time, with drops of over 25% in some years. These characteristics do not bode well for income investors seeking reliable stream of dividends.
Relative to peers, Singapore Press Holdings has a yield of 4.9%, which is high for Media stocks but still below the market’s top dividend payers.
Next Steps:
After digging a little deeper into Singapore Press Holdings’s yield, it’s easy to see why you should be cautious investing in the company just for the dividend. But if you are not exclusively a dividend investor, the stock could still be an interesting investment opportunity. Given that this is purely a dividend analysis, I urge potential investors to try and get a good understanding of the underlying business and its fundamentals before deciding on an investment. There are three relevant factors you should look at: