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

Asia Tele-Net and Technology Corporation Limited's (HKG:679) investors are due to receive a payment of HK$0.02 per share on 24th of July. This makes the dividend yield 3.3%, which will augment investor returns quite nicely.

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

A big dividend yield for a few years doesn't mean much if it can't be sustained. However, prior to this announcement, Asia Tele-Net and Technology's dividend was comfortably covered by both cash flow and earnings. This means that most of its earnings are being retained to grow the business.

Recent, EPS has fallen by 14.3%, so this could continue over the next year. 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.

View our latest analysis for Asia Tele-Net and Technology

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

It's comforting to see that Asia Tele-Net and Technology has been paying a dividend for a number of years now, however it has been cut at least once in that time. This makes us cautious about the consistency of the dividend over a full economic cycle. Since 2020, the dividend has gone from HK$0.02 total annually to HK$0.03. This means that it has been growing its distributions at 8.4% per annum over that time. A reasonable rate of dividend growth is good to see, but we're wary that the dividend history is not as solid as we'd like, having been cut at least once.

Dividend Growth Potential Is Shaky

With a relatively unstable dividend, it's even more important to see if earnings per share is growing. Over the past five years, it looks as though Asia Tele-Net and Technology's EPS has declined at around 14% a year. Dividend payments are likely to come under some pressure unless EPS can pull out of the nosedive it is in.

Our Thoughts On Asia Tele-Net and Technology's Dividend

Overall, we don't think this company makes a great dividend stock, even though the dividend wasn't cut this year. In the past, the payments have been unstable, but over the short term the dividend could be reliable, with the company generating enough cash to cover it. Overall, we don't think this company has the makings of a good income stock.

Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. To that end, Asia Tele-Net and Technology has 3 warning signs (and 1 which is a bit concerning) we think you should know about. If you are a dividend investor, you might also want to look at our curated 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.