Sing Investments & Finance Limited (SGX:S35) stock is about to trade ex-dividend in 3 days time. This means that investors who purchase shares on or after the 22nd of May will not receive the dividend, which will be paid on the 3rd of June.
Sing Investments & Finance’s upcoming dividend is S$0.06 a share, following on from the last 12 months, when the company distributed a total of S$0.06 per share to shareholders. Looking at the last 12 months of distributions, Sing Investments & Finance has a trailing yield of approximately 4.8% on its current stock price of SGD1.25. We love seeing companies pay a dividend, but it’s also important to be sure that laying the golden eggs isn’t going to kill our golden goose! That’s why we should always check whether the dividend payments appear sustainable, and if the company is growing.
Dividends are usually paid out of company profits, so if a company pays out more than it earned then its dividend is usually at greater risk of being cut. Fortunately Sing Investments & Finance’s payout ratio is modest, at just 49% of profit.
Companies that pay out less in dividends than they earn in profits generally have more sustainable dividends. The lower the payout ratio, the more wiggle room the business has before it could be forced to cut the dividend.
Have Earnings And Dividends Been Growing?
Companies with consistently growing earnings per share generally make the best dividend stocks, as they usually find it easier to grow dividends per share. If business enters a downturn and the dividend is cut, the company could see its value fall precipitously. With that in mind, we’re encouraged by the steady growth at Sing Investments & Finance, with earnings per share up 8.7% on average over the last five years.
Many investors will assess a company’s dividend performance by evaluating how much the dividend payments have changed over time. Sing Investments & Finance’s dividend payments per share have declined at 2.8% per year on average over the past ten years, which is uninspiring. Sing Investments & Finance is a rare case where dividends have been decreasing at the same time as earnings per share have been improving. It’s unusual to see, and could point to unstable conditions in the core business, or more rarely an intensified focus on reinvesting profits.
Is Sing Investments & Finance an attractive dividend stock, or better left on the shelf? Sing Investments & Finance has seen its earnings per share grow slowly in recent years, and the company reinvests more than half of its profits in the business, which generally bodes well for its future prospects. Overall, Sing Investments & Finance looks like a promising dividend stock in this analysis, and we think it would be worth investigating further.
With that in mind, a critical part of thorough stock research is being aware of any risks that stock currently faces. For example – Sing Investments & Finance has 1 warning sign we think you should be aware of.
If you’re in the market for dividend stocks, we recommend checking our list of top dividend stocks with a greater than 2% yield and an upcoming dividend.
This article by Simply Wall St is general in nature. 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. Thank you for reading.