Tsim Sha Tsui Properties (HKG:247) Is Due To Pay A Dividend Of 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' 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 54% of earnings, however it was paying out 137% of free cash flows. While the company may be more focused on returning cash to shareholders than growing the business at this time, we think that a cash payout ratio this high might expose the dividend to being cut if the business ran into some challenges.

Over the next year, EPS could expand by 17.2% if recent trends continue. If the dividend continues along recent trends, we estimate the payout ratio will be 47%, which is in the range that makes us comfortable with the sustainability of the dividend.

View our latest analysis for Tsim Sha Tsui Properties

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. 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

The company's investors will be pleased to have been receiving dividend income for some time. We are encouraged to see that Tsim Sha Tsui Properties has grown earnings per share 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.

In Summary

Overall, it's nice to see a consistent dividend payment, but we think that longer term, the current level of payment might be unsustainable. With cash flows lacking, it is difficult to see how the company can sustain a dividend payment. We don't think Tsim Sha Tsui Properties is a great stock to add to your portfolio if income is your focus.

Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. However, there are other things to consider for investors when analysing stock performance. Just as an example, we've come across 3 warning signs for Tsim Sha Tsui Properties you should be aware of, and 1 of them is a bit concerning. 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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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.