Dah Sing Banking Group (HKG:2356) Will Pay A Dividend Of HK$0.39

The board of Dah Sing Banking Group Limited (HKG:2356) has announced that it will pay a dividend on the 18th of June, with investors receiving HK$0.39 per share. This means that the annual payment will be 8.7% of the current stock price, which is in line with the average for the industry.

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

Unless the payments are sustainable, the dividend yield doesn't mean too much.

Dah Sing Banking Group has established itself as a dividend paying company with over 10 years history of distributing earnings to shareholders. Based on Dah Sing Banking Group's last earnings report, the payout ratio is at a decent 34%, meaning that the company is able to pay out its dividend with a bit of room to spare.

The next 3 years are set to see EPS grow by 30.0%. Analysts forecast the future payout ratio could be 47% over the same time horizon, which is a number we think the company can maintain.

Check out our latest analysis for Dah Sing Banking Group

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 annual payment during the last 10 years was HK$0.33 in 2015, and the most recent fiscal year payment was HK$0.76. This means that it has been growing its distributions at 8.7% per annum over that time. We have seen cuts in the past, so while the growth looks promising we would be a little bit cautious about its track record.

Dividend Growth May Be Hard To Achieve

With a relatively unstable dividend, it's even more important to see if earnings per share is growing. Unfortunately, Dah Sing Banking Group's earnings per share has been essentially flat over the past five years, which means the dividend may not be increased each year.

In Summary

In summary, dividends being cut isn't ideal, however it can bring the payment into a more sustainable range. While Dah Sing Banking Group is earning enough to cover the dividend, we are generally unimpressed with its future prospects. We don't think Dah Sing Banking Group is a great stock to add to your portfolio if income is your focus.

Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular 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 Dah Sing Banking Group that investors should take into consideration. Is Dah Sing Banking Group not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

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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.