Wing Tai Properties (HKG:369) Has Affirmed Its Dividend Of HK$0.03

Wing Tai Properties Limited (HKG:369) will pay a dividend of HK$0.03 on the 6th of October. The dividend yield is 4.1% based on this payment, which is a little bit low compared to the other companies in the industry.

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Estimates Indicate Wing Tai Properties' Dividend Coverage Likely To Improve

The dividend yield is a little bit low, but sustainability of the payments is also an important part of evaluating an income stock. Even though Wing Tai Properties is not generating a profit, it is still paying a dividend. Along with this, it is also not generating free cash flows, which raises concerns about the sustainability of the dividend.

Looking forward, earnings per share is forecast to rise by 160.3% over the next year. If the dividend continues on this path, the payout ratio could be 6.6% by next year, which we think can be pretty sustainable going forward.

View our latest analysis for Wing Tai Properties

Dividend Volatility

Although the company has a long dividend history, it has been cut at least once in the last 10 years. The dividend has gone from an annual total of HK$0.135 in 2015 to the most recent total annual payment of HK$0.07. Doing the maths, this is a decline of about 6.4% per year. Declining dividends isn't generally what we look for as they can indicate that the company is running into some challenges.

Dividend Growth Potential Is Shaky

Dividends have been going in the wrong direction, so we definitely want to see a different trend in the earnings per share. Earnings per share has been sinking by 49% over the last five years. Such rapid declines definitely have the potential to constrain dividend payments if the trend continues into the future. It's not all bad news though, as the earnings are predicted to rise over the next 12 months - we would just be a bit cautious until this becomes a long term trend.

Wing Tai Properties' Dividend Doesn't Look Great

Overall, while some might be pleased that the dividend wasn't cut, we think this may help Wing Tai Properties make more consistent payments in the future. The company's earnings aren't high enough to be making such big distributions, and it isn't backed up by strong growth or consistency either. Considering all of these factors, we wouldn't rely on this dividend if we wanted to live on the income.

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. For instance, we've picked out 1 warning sign for Wing Tai Properties that investors should take into consideration. Is Wing Tai 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.