Tsim Sha Tsui Properties (HKG:247) Is Paying Out A Dividend Of HK$0.15

Tsim Sha Tsui Properties Limited's (HKG:247) investors are due to receive a payment of HK$0.15 per share on 18th of April. This means the annual payment will be 3.0% of the current stock price, which is lower than the industry average.

Check out our latest analysis for Tsim Sha Tsui Properties

Tsim Sha Tsui Properties' Earnings Easily Cover The Distributions

If it is predictable over a long period, even low dividend yields can be attractive. Based on the last payment, Tsim Sha Tsui Properties was earning enough to cover the dividend, but free cash flows weren't positive. We think that cash flows should take priority over earnings, so this is definitely a worry for the dividend going forward.

EPS is set to fall by 4.2% over the next 12 months if recent trends continue. Assuming the dividend continues along recent trends, we believe the payout ratio could be 38%, which we are pretty comfortable with and we think is feasible on an earnings basis.

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. Since 2014, the annual payment back then was HK$0.48, compared to the most recent full-year payment of HK$0.58. This works out to be a compound annual growth rate (CAGR) of approximately 1.9% a year over that time. Slow and steady dividend growth might not sound that exciting, but dividends have been stable for ten years, which we think makes this a fairly attractive offer.

The Dividend's Growth Prospects Are Limited

Investors who have held shares in the company for the past few years will be happy with the dividend income they have received. However, initial appearances might be deceiving. It's not great to see that Tsim Sha Tsui Properties' earnings per share has fallen at approximately 4.2% per year over the past five years. If earnings continue declining, the company may have to make the difficult choice of reducing the dividend or even stopping it completely - the opposite of dividend growth.

In Summary

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. With cash flows lacking, it is difficult to see how the company can sustain a dividend payment. We would probably look elsewhere for an income investment.

Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. For example, we've picked out 1 warning sign for Tsim Sha Tsui Properties that investors should know about before committing capital to this stock. 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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