It Might Not Be A Great Idea To Buy Tian Teck Land Limited (HKG:266) For Its Next Dividend

Tian Teck Land Limited (HKG:266) stock is about to trade ex-dividend in 4 days. Investors can purchase shares before the 14th of December in order to be eligible for this dividend, which will be paid on the 13th of January.

Tian Teck Land's upcoming dividend is HK$0.10 a share, following on from the last 12 months, when the company distributed a total of HK$0.20 per share to shareholders. Based on the last year's worth of payments, Tian Teck Land stock has a trailing yield of around 4.0% on the current share price of HK$5. If you buy this business for its dividend, you should have an idea of whether Tian Teck Land's dividend is reliable and sustainable. So we need to investigate whether Tian Teck Land can afford its dividend, and if the dividend could grow.

See our latest analysis for Tian Teck Land

If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. Tian Teck Land reported a loss after tax last year, which means it's paying a dividend despite being unprofitable. While this might be a one-off event, this is unlikely to be sustainable in the long term. With the recent loss, it's important to check if the business generated enough cash to pay its dividend. If Tian Teck Land didn't generate enough cash to pay the dividend, then it must have either paid from cash in the bank or by borrowing money, neither of which is sustainable in the long term. It paid out more than half (66%) of its free cash flow in the past year, which is within an average range for most companies.

Click here to see how much of its profit Tian Teck Land paid out over the last 12 months.

Have Earnings And Dividends Been Growing?

Companies with falling earnings are riskier for dividend shareholders. If earnings fall far enough, the company could be forced to cut its dividend. Tian Teck Land reported a loss last year, and the general trend suggests its earnings have also been declining in recent years, making us wonder if the dividend is at risk.

Many investors will assess a company's dividend performance by evaluating how much the dividend payments have changed over time. Tian Teck Land has delivered 1.8% dividend growth per year on average over the past nine years.

We update our analysis on Tian Teck Land every 24 hours, so you can always get the latest insights on its financial health, here.

To Sum It Up

Has Tian Teck Land got what it takes to maintain its dividend payments? It's hard to get used to Tian Teck Land paying a dividend despite reporting a loss over the past year. At least the dividend was covered by free cash flow, however. It's not an attractive combination from a dividend perspective, and we're inclined to pass on this one for the time being.

Although, if you're still interested in Tian Teck Land and want to know more, you'll find it very useful to know what risks this stock faces. For instance, we've identified 2 warning signs for Tian Teck Land (1 doesn't sit too well with us) you should be aware of.

If you're in the market for dividend stocks, we recommend checking our list of top 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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