Sun Hung Kai Properties Limited (HKG:16) Stock Goes Ex-Dividend In Just Four Days

Sun Hung Kai Properties Limited (HKG:16) stock is about to trade ex-dividend in four days. You will need to purchase shares before the 10th of March to receive the dividend, which will be paid on the 18th of March.

Sun Hung Kai Properties's upcoming dividend is HK$1.25 a share, following on from the last 12 months, when the company distributed a total of HK$4.95 per share to shareholders. Based on the last year's worth of payments, Sun Hung Kai Properties has a trailing yield of 4.2% on the current stock price of HK$119.2. Dividends are a major contributor to investment returns for long term holders, but only if the dividend continues to be paid. So we need to investigate whether Sun Hung Kai Properties can afford its dividend, and if the dividend could grow.

Check out our latest analysis for Sun Hung Kai Properties

Dividends are usually paid out of company profits, so if a company pays out more than it earned then its dividend is usually at greater risk of being cut. Sun Hung Kai Properties paid out more than half (66%) of its earnings last year, which is a regular payout ratio for most companies. Yet cash flow is typically more important than profit for assessing dividend sustainability, so we should always check if the company generated enough cash to afford its dividend. Thankfully its dividend payments took up just 32% of the free cash flow it generated, which is a comfortable payout ratio.

It's encouraging to see that the dividend is covered by both profit and cash flow. This generally suggests the dividend is sustainable, as long as earnings don't drop precipitously.

Click here to see the company's payout ratio, plus analyst estimates of its future dividends.

Have Earnings And Dividends Been Growing?

When earnings decline, dividend companies become much harder to analyse and own safely. If earnings decline and the company is forced to cut its dividend, investors could watch the value of their investment go up in smoke. Sun Hung Kai Properties's earnings per share have fallen at approximately 7.6% a year over the previous five years. When earnings per share fall, the maximum amount of dividends that can be paid also falls.

Many investors will assess a company's dividend performance by evaluating how much the dividend payments have changed over time. In the last 10 years, Sun Hung Kai Properties has lifted its dividend by approximately 6.9% a year on average. That's interesting, but the combination of a growing dividend despite declining earnings can typically only be achieved by paying out more of the company's profits. This can be valuable for shareholders, but it can't go on forever.

Final Takeaway

Is Sun Hung Kai Properties worth buying for its dividend? The payout ratios are within a reasonable range, implying the dividend may be sustainable. Declining earnings are a serious concern, however, and could pose a threat to the dividend in future. In summary, while it has some positive characteristics, we're not inclined to race out and buy Sun Hung Kai Properties today.

If you want to look further into Sun Hung Kai Properties, it's worth knowing the risks this business faces. For example, we've found 2 warning signs for Sun Hung Kai Properties that we recommend you consider before investing in the business.

A common investment mistake is buying the first interesting stock you see. Here you can find a list of promising dividend stocks with a greater than 2% yield and an upcoming dividend.

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This article by Simply Wall St is general in nature. 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.
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