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In the pursuit of reliable income streams, dividend stocks are a popular choice among investors. However, it's crucial to examine whether a high dividend yield is supported by the company’s financial health. A high payout ratio can be a red flag, indicating that a company might be distributing more money to shareholders than it can afford, which could jeopardize future dividends. This article will explore one such example where caution is advised due to an unsustainable payout ratio and contrast it with other more stable dividend-paying options.
Top 10 Dividend Stocks
| Name | Dividend Yield | Dividend Rating |
| Allianz (XTRA:ALV) | 5.31% | ★★★★★★ |
| Yamato Kogyo (TSE:5444) | 3.68% | ★★★★★★ |
| Business Brain Showa-Ota (TSE:9658) | 3.59% | ★★★★★★ |
| Ping An Bank (SZSE:000001) | 7.01% | ★★★★★★ |
| FALCO HOLDINGS (TSE:4671) | 6.52% | ★★★★★★ |
| Kwong Lung Enterprise (TPEX:8916) | 5.62% | ★★★★★★ |
| KurimotoLtd (TSE:5602) | 5.15% | ★★★★★★ |
| Banque Cantonale Vaudoise (SWX:BCVN) | 4.49% | ★★★★★★ |
| James Latham (AIM:LTHM) | 6.30% | ★★★★★★ |
| GakkyushaLtd (TSE:9769) | 4.05% | ★★★★★★ |
Click here to see the full list of 1969 stocks from our Top Dividend Stocks screener.
Let's take a closer look at one of our picks from the screened companies and one you may wish to avoid.
Top Pick
Samudera Indonesia
Simply Wall St Dividend Rating: ★★★★☆☆
Overview: PT Samudera Indonesia Tbk operates in cargo transportation and integrated logistics, serving markets in Indonesia, Southeast Asia, the Middle East, and India with a market capitalization of IDR 5.93 trillion.
Operations: The company generates revenue primarily through its Shipping and Agency Services, which contributed $565.13 million, and Logistics and Ports Services, adding $160.92 million.
Dividend Yield: 9.3%
PT Samudera Indonesia Tbk offers a high dividend yield of 9.35%, ranking in the top 25% of Indonesian market payers. However, its dividends have shown volatility and unreliability over the past decade, with significant fluctuations and a lack of consistent growth. Despite this, the payout ratio stands at a low 0.9%, suggesting earnings sufficiently cover dividend payments, contrasting sharply with firms where high payout ratios raise sustainability concerns. Recent financials indicate a drop in net income from US$27.44 million to US$10.16 million year-over-year, reflecting potential pressures on profitability.
One To Reconsider
Nanjing TDH TechnologyLtd
Simply Wall St Dividend Rating: ★☆☆☆☆☆