Tsim Sha Tsui Properties (HKG:247) Has Announced A Dividend Of HK$0.15

The board of Tsim Sha Tsui Properties Limited (HKG:247) has announced that it will pay a dividend on the 23rd of April, with investors receiving HK$0.15 per share. The dividend yield is 2.9% based on this payment, which is a little bit low compared to the other companies in the industry.

View our latest analysis for Tsim Sha Tsui Properties

Tsim Sha Tsui Properties' Projected Earnings Seem Likely To Cover Future Distributions

If it is predictable over a long period, even low dividend yields can be attractive. Prior to this announcement, Tsim Sha Tsui Properties' dividend was only 44% of earnings, however it was paying out 109% of free cash flows. This signals that the company is more focused on returning cash flow to shareholders, but it could mean that the dividend is exposed to cuts in the future.

Looking forward, EPS could fall by 12.9% if the company can't turn things around from the last few years. Assuming the dividend continues along recent trends, we believe the payout ratio could be 70%, which we are pretty comfortable with and we think is feasible on an earnings basis.

Tsim Sha Tsui Properties Has A Solid Track Record

The company has an extended history of paying stable dividends. 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 works out to be a compound annual growth rate (CAGR) of approximately 1.5% a year over that time. While the consistency in the dividend payments is impressive, we think the relatively slow rate of growth is less attractive.

Dividend Growth Potential Is Shaky

Some investors will be chomping at the bit to buy some of the company's stock based on its dividend history. However, things aren't all that rosy. Tsim Sha Tsui Properties' EPS has fallen by approximately 13% per year during the past five years. A sharp decline in earnings per share is not great from from a dividend perspective. Even conservative payout ratios can come under pressure if earnings fall far enough.

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. Overall, we don't think this company has the makings of a good income stock.

Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. However, there are other things to consider for investors when analysing stock performance. See if management have their own wealth at stake, by checking insider shareholdings in Tsim Sha Tsui Properties stock. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.

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