Tsim Sha Tsui Properties' (HKG:247) Dividend Will Be HK$0.43

Tsim Sha Tsui Properties Limited (HKG:247) has announced that it will pay a dividend of HK$0.43 per share on the 3rd of December. The dividend yield is 2.9% based on this payment, which is a little bit low compared to the other companies in the industry.

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Tsim Sha Tsui Properties' Future Dividend Projections Appear Well Covered By Earnings

The dividend yield is a little bit low, but sustainability of the payments is also an important part of evaluating an income stock. The last payment was quite easily covered by earnings, but it made up 137% of cash flows. The company might be more focused on returning cash to shareholders, but paying out this much of its cash flow could expose the dividend to being cut in the future.

If the trend of the last few years continues, EPS will grow by 17.2% over the next 12 months. If the dividend continues on this path, the payout ratio could be 47% by next year, which we think can be pretty sustainable going forward.

View our latest analysis for Tsim Sha Tsui Properties

Tsim Sha Tsui Properties Has A Solid Track Record

Even over a long history of paying dividends, the company's distributions have been remarkably stable. The annual payment during the last 10 years was HK$0.50 in 2015, and the most recent fiscal year payment was HK$0.58. This implies that the company grew its distributions at a yearly rate of about 1.5% over that duration. Although we can't deny that the dividend has been remarkably stable in the past, the growth has been pretty muted.

The Dividend Looks Likely To Grow

Some investors will be chomping at the bit to buy some of the company's stock based on its dividend history. Tsim Sha Tsui Properties has impressed us by growing EPS at 17% per year over the past five years. The lack of cash flows does make us a bit cautious though, especially when it comes to the future of the dividend.

Our Thoughts On Tsim Sha Tsui Properties' Dividend

In summary, while it's good to see that the dividend hasn't been cut, we are a bit cautious about Tsim Sha Tsui Properties' payments, as there could be some issues with sustaining them into the future. While Tsim Sha Tsui Properties is earning enough to cover the payments, the cash flows are lacking. We would be a touch cautious of relying on this stock primarily for the dividend income.

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. To that end, Tsim Sha Tsui Properties has 3 warning signs (and 1 which is a bit unpleasant) we think you should know about. Is Tsim Sha Tsui Properties not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

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