S.A.S. Dragon Holdings' (HKG:1184) Dividend Will Be HK$0.15

S.A.S. Dragon Holdings Limited's (HKG:1184) investors are due to receive a payment of HK$0.15 per share on 9th of October. This will take the dividend yield to an attractive 10.0%, providing a nice boost to shareholder returns.

See our latest analysis for S.A.S. Dragon Holdings

S.A.S. Dragon Holdings' Future Dividend Projections Appear Well Covered By Earnings

While it is great to have a strong dividend yield, we should also consider whether the payment is sustainable. Based on the last payment, S.A.S. Dragon Holdings' earnings were much higher than the dividend, but it wasn't converting those earnings into cash flow. In general, we consider cash flow to be more important than earnings, so we would be cautious about relying on the sustainability of this dividend.

If the trend of the last few years continues, EPS will grow by 11.3% over the next 12 months. Assuming the dividend continues along recent trends, we think the payout ratio could be 56% by next year, which is in a pretty sustainable range.

Dividend Volatility

The company has a long dividend track record, but it doesn't look great with cuts in the past. The dividend has gone from an annual total of HK$0.133 in 2014 to the most recent total annual payment of HK$0.40. This means that it has been growing its distributions at 12% per annum over that time. S.A.S. Dragon Holdings has grown distributions at a rapid rate despite cutting the dividend at least once in the past. Companies that cut once often cut again, so we would be cautious about buying this stock solely for the dividend income.

The Dividend Looks Likely To Grow

With a relatively unstable dividend, it's even more important to see if earnings per share is growing. S.A.S. Dragon Holdings has seen EPS rising for the last five years, at 11% per annum. The lack of cash flows does make us a bit cautious though, especially when it comes to the future of the dividend.

Our Thoughts On S.A.S. Dragon Holdings' Dividend

Overall, we always like to see the dividend being raised, but we don't think S.A.S. Dragon Holdings will make a great income stock. While S.A.S. Dragon Holdings is earning enough to cover the payments, the cash flows are lacking. We would be a touch cautious of relying on this stock primarily for the dividend income.

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. For example, we've identified 2 warning signs for S.A.S. Dragon Holdings (1 makes us a bit uncomfortable!) that you should be aware of before investing. Is S.A.S. Dragon Holdings 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.