Dah Sing Banking Group (HKG:2356) Will Pay A Dividend Of HK$0.10

The board of Dah Sing Banking Group Limited (HKG:2356) has announced that it will pay a dividend on the 21st of September, with investors receiving HK$0.10 per share. Including this payment, the dividend yield on the stock will be 5.7%, which is a modest boost for shareholders' returns.

View our latest analysis for Dah Sing Banking Group

Dah Sing Banking Group's Earnings Will Easily Cover The Distributions

Even a low dividend yield can be attractive if it is sustained for years on end.

Dah Sing Banking Group has a long history of paying out dividends, with its current track record at a minimum of 10 years. Taking data from its last earnings report, calculating for the company's payout ratio shows 29%, which means that Dah Sing Banking Group would be able to pay its last dividend without pressure on the balance sheet.

The next 3 years are set to see EPS grow by 38.3%. The future payout ratio could be 31% over that time period, according to analyst estimates, which is a good look for the future of the dividend.

Dividend Volatility

While the company has been paying a dividend for a long time, it has cut the dividend at least once in the last 10 years. The dividend has gone from an annual total of HK$0.28 in 2012 to the most recent total annual payment of HK$0.34. This implies that the company grew its distributions at a yearly rate of about 2.0% over that duration. It's encouraging to see some dividend growth, but the dividend has been cut at least once, and the size of the cut would eliminate most of the growth anyway, which makes this less attractive as an income investment.

Dividend Growth Is Doubtful

Growing earnings per share could be a mitigating factor when considering the past fluctuations in the dividend. Dah Sing Banking Group has seen earnings per share falling at 7.1% per year over the last five years. A modest decline in earnings isn't great, and it makes it quite unlikely that the dividend will grow in the future unless that trend can be reversed. It's not all bad news though, as the earnings are predicted to rise over the next 12 months - we would just be a bit cautious until this can turn into a longer term trend.

Our Thoughts On Dah Sing Banking Group's Dividend

In summary, while it's good to see that the dividend hasn't been cut, we are a bit cautious about Dah Sing Banking Group's payments, as there could be some issues with sustaining them into the future. The company hasn't been paying a very consistent dividend over time, despite only paying out a small portion of earnings. We don't think Dah Sing Banking Group is a great stock to add to your portfolio if income is your focus.

Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. Taking the debate a bit further, we've identified 1 warning sign for Dah Sing Banking Group that investors need to be conscious of moving forward. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.

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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.