In This Article:
GuocoLand Limited (SGX:F17) will pay a dividend of SGD0.06 on the 19th of November. This means the dividend yield will be fairly typical at 3.9%.
Check out our latest analysis for GuocoLand
GuocoLand's Payment Has Solid Earnings Coverage
We like to see a healthy dividend yield, but that is only helpful to us if the payment can continue. Prior to this announcement, GuocoLand's earnings easily covered the dividend, but free cash flows were negative. We think that cash flows should take priority over earnings, so this is definitely a worry for the dividend going forward.
Over the next year, EPS could expand by 0.06% if recent trends continue. Assuming the dividend continues along recent trends, we think the payout ratio could be 35% by next year, which is in a pretty sustainable range.
GuocoLand Has A Solid Track Record
The company has an extended history of paying stable dividends. The dividend has gone from an annual total of SGD0.05 in 2014 to the most recent total annual payment of SGD0.06. This implies that the company grew its distributions at a yearly rate of about 1.8% over that duration. Although we can't deny that the dividend has been remarkably stable in the past, the growth has been pretty muted.
GuocoLand May Find It Hard To Grow The Dividend
Investors who have held shares in the company for the past few years will be happy with the dividend income they have received. Unfortunately, GuocoLand's earnings per share has been essentially flat over the past five years, which means the dividend may not be increased each year. While growth may be thin on the ground, GuocoLand could always pay out a higher proportion of earnings to increase shareholder returns.
In Summary
Overall, we don't think this company makes a great dividend stock, even though the dividend wasn't cut this year. With cash flows lacking, it is difficult to see how the company can sustain a dividend payment. We would probably look elsewhere for an income investment.
Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. Just as an example, we've come across 5 warning signs for GuocoLand you should be aware of, and 1 of them doesn't sit too well with us. Is GuocoLand not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
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.