Is It Worth Considering Dah Sing Banking Group Limited (HKG:2356) For Its Upcoming Dividend?

Dah Sing Banking Group Limited (HKG:2356) stock is about to trade ex-dividend in three days. The ex-dividend date is usually set to be one business day before the record date which is the cut-off date on which you must be present on the company's books as a shareholder in order to receive the dividend. It is important to be aware of the ex-dividend date because any trade on the stock needs to have been settled on or before the record date. Accordingly, Dah Sing Banking Group investors that purchase the stock on or after the 7th of September will not receive the dividend, which will be paid on the 21st of September.

The company's next dividend payment will be HK$0.11 per share, on the back of last year when the company paid a total of HK$0.40 to shareholders. Last year's total dividend payments show that Dah Sing Banking Group has a trailing yield of 7.4% on the current share price of HK$5.37. If you buy this business for its dividend, you should have an idea of whether Dah Sing Banking Group's dividend is reliable and sustainable. So we need to investigate whether Dah Sing Banking Group can afford its dividend, and if the dividend could grow.

Check out our latest analysis for Dah Sing Banking Group

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. That's why it's good to see Dah Sing Banking Group paying out a modest 35% of its earnings.

Generally speaking, the lower a company's payout ratios, the more resilient its dividend usually is.

Click here to see the company's payout ratio, plus analyst estimates of its future dividends.

Have Earnings And Dividends Been Growing?

Businesses with shrinking earnings are tricky from a dividend perspective. If business enters a downturn and the dividend is cut, the company could see its value fall precipitously. Readers will understand then, why we're concerned to see Dah Sing Banking Group's earnings per share have dropped 5.8% a year over the past five years. Such a sharp decline casts doubt on the future sustainability of the dividend.

Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. Dah Sing Banking Group has delivered 2.6% dividend growth per year on average over the past 10 years.

The Bottom Line

From a dividend perspective, should investors buy or avoid Dah Sing Banking Group? Earnings per share have shrunk noticeably in recent years, although we like that the company has a low payout ratio. This could suggest a cut to the dividend may not be a major risk in the near future. It doesn't appear an outstanding opportunity, but could be worth a closer look.

With that being said, if dividends aren't your biggest concern with Dah Sing Banking Group, you should know about the other risks facing this business. Our analysis shows 1 warning sign for Dah Sing Banking Group and you should be aware of it before buying any shares.

A common investing mistake is buying the first interesting stock you see. Here you can find a full list of high-yield 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.