Asia Tele-Net and Technology (HKG:679) Will Pay A Dividend Of HK$0.02

The board of Asia Tele-Net and Technology Corporation Limited (HKG:679) has announced that it will pay a dividend on the 25th of July, with investors receiving HK$0.02 per share. This means the annual payment will be 2.7% of the current stock price, which is lower than the industry average.

See our latest analysis for Asia Tele-Net and Technology

Asia Tele-Net and Technology Might Find It Hard To Continue The Dividend

It would be nice for the yield to be higher, but we should also check if higher levels of dividend payment would be sustainable. Even in the absence of profits, Asia Tele-Net and Technology is paying a dividend. It is also not generating any free cash flow, we definitely have concerns when it comes to the sustainability of the dividend.

Over the next year, EPS might fall by 40.8% based on recent performance. This will push the company into unprofitability, which means the managers will have to choose between suspending the dividend, or paying it out of cash reserves.

Asia Tele-Net and Technology's Dividend Has Lacked Consistency

The track record isn't the longest, but we are already seeing a bit of instability in the payments. The dividend has gone from HK$0.02 in 2020 to the most recent annual payment of HK$0.03. This means that it has been growing its distributions at 22% per annum over that time. It is great to see strong growth in the dividend payments, but cuts are concerning as it may indicate the payout policy is too ambitious.

The Dividend Has Limited Growth Potential

With a relatively unstable dividend, it's even more important to evaluate if earnings per share is growing, which could point to a growing dividend in the future. Asia Tele-Net and Technology's earnings per share has shrunk at 41% a year over the past five years. Such rapid declines definitely have the potential to constrain dividend payments if the trend continues into the future.

Asia Tele-Net and Technology's Dividend Doesn't Look Great

In summary, while it is good to see that the dividend hasn't been cut, we think that at current levels the payment isn't particularly sustainable. The company isn't making enough to be paying as much as it is, and the other factors don't look particularly promising either. Considering all of these factors, we wouldn't rely on this dividend if we wanted to live on the income.

It's important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. Case in point: We've spotted 2 warning signs for Asia Tele-Net and Technology (of which 1 is a bit unpleasant!) you should know about. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.

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