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Have you been keeping an eye on Wing Tai Holdings Limited’s (SGX:W05) upcoming dividend of S$0.08 per share payable on the 23 November 2018? Then you only have 4 days left before the stock starts trading ex-dividend on the 05 November 2018. Is this future income stream a compelling catalyst for dividend investors to think about the stock as an investment today? Let’s take a look at Wing Tai Holdings’s most recent financial data to examine its dividend characteristics in more detail.
Check out our latest analysis for Wing Tai Holdings
5 questions to ask before buying a dividend stock
When assessing a stock as a potential addition to my dividend Portfolio, I look at these five areas:
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Is their annual yield among the top 25% of dividend payers?
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Has it consistently paid a stable dividend without missing a payment or drastically cutting payout?
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Has it increased its dividend per share amount over the past?
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Can it afford to pay the current rate of dividends from its earnings?
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Will it be able to continue to payout at the current rate in the future?
How well does Wing Tai Holdings fit our criteria?
The current trailing twelve-month payout ratio for the stock is 19%, which means that the dividend is covered by earnings. In the near future, analysts are predicting a higher payout ratio of 66%, leading to a dividend yield of around 3.5%. However, EPS is forecasted to fall to SGD0.11 in the upcoming year. Therefore, although payout is expected to increase, the fall in earnings may not equate to higher dividend income.
When thinking about whether a dividend is sustainable, another factor to consider is the cash flow. Companies with strong cash flow can sustain a higher payout ratio, while companies with weaker cash flow generally cannot.
If there’s one type of stock you want to be reliable, it’s dividend stocks and their stable income-generating ability. Whilst its per-share payments have increased during the past 10 years, there has been some hiccups. Shareholders would have seen a few years of reduced payments in this time.
Compared to its peers, Wing Tai Holdings has a yield of 4.1%, which is high for Real Estate stocks but still below the market’s top dividend payers.
Next Steps:
Keeping in mind the dividend characteristics above, Wing Tai Holdings is definitely worth considering for investors looking to build a dedicated income portfolio. Given that this is purely a dividend analysis, I recommend taking sufficient time to understand its core business and determine whether the company and its investment properties suit your overall goals. Below, I’ve compiled three relevant factors you should further examine: