In This Article:
NetLink NBN Trust (SGX:CJLU) will pay a dividend of SGD0.0268 on the 11th of June. This makes the dividend yield 5.9%, which is above the industry average.
Estimates Indicate NetLink NBN Trust's Could Struggle to Maintain Dividend Payments In The Future
Impressive dividend yields are good, but this doesn't matter much if the payments can't be sustained. Based on the last payment, the company wasn't making enough to cover what it was paying to shareholders. It will be difficult to sustain this level of payout so we wouldn't be confident about this continuing.
Earnings per share is forecast to rise by 13.8% over the next year. If the dividend continues on its recent course, the payout ratio in 12 months could be 193%, which is a bit high and could start applying pressure to the balance sheet.
See our latest analysis for NetLink NBN Trust
NetLink NBN Trust Is Still Building Its Track Record
Even though the company has been paying a consistent dividend for a while, we would like to see a few more years before we feel comfortable relying on it. Since 2018, the annual payment back then was SGD0.0462, compared to the most recent full-year payment of SGD0.0536. This implies that the company grew its distributions at a yearly rate of about 2.1% over that duration. NetLink NBN Trust hasn't been paying a dividend for very long, so we wouldn't get to excited about its record of growth just yet.
Dividend Growth May Be Hard To Achieve
Investors who have held shares in the company for the past few years will be happy with the dividend income they have received. Earnings per share has been crawling upwards at 4.1% per year. With anaemic earnings growth, it's not confidence inspiring to see NetLink NBN Trust paying out more than double what it is earning. Meaning that on balance, the dividend is more likely to fall in the future than to grow.
The Dividend Could Prove To Be Unreliable
In summary, while it's always good to see the dividend being raised, we don't think NetLink NBN Trust's payments are rock solid. The track record isn't great, and the payments are a bit high to be considered sustainable. This company is not in the top tier of income providing stocks.
It's important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. For instance, we've picked out 1 warning sign for NetLink NBN Trust that investors should take into consideration. If you are a dividend investor, you might also want to look at our curated list of high yield 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.