Yan Tat Group Holdings (HKG:1480) Has Affirmed Its Dividend Of HK$0.06

The board of Yan Tat Group Holdings Limited (HKG:1480) has announced that it will pay a dividend of HK$0.06 per share on the 6th of July. Based on this payment, the dividend yield will be 5.0%, which is fairly typical for the industry.

Check out our latest analysis for Yan Tat Group Holdings

Yan Tat Group Holdings' Dividend Is Well Covered By Earnings

We like to see a healthy dividend yield, but that is only helpful to us if the payment can continue. Before making this announcement, Yan Tat Group Holdings was paying a whopping 105% as a dividend, but this only made up 31% of its overall earnings. While the business may be attempting to set a balanced dividend policy, a cash payout ratio this high might expose the dividend to being cut if the business ran into some challenges.

Over the next year, EPS could expand by 14.6% if recent trends continue. Assuming the dividend continues along recent trends, we think the payout ratio could be 30% by next year, which is in a pretty sustainable range.

Yan Tat Group Holdings' Dividend Has Lacked Consistency

Looking back, Yan Tat Group Holdings' dividend hasn't been particularly consistent. This suggests that the dividend might not be the most reliable. Since 2015, the first annual payment was HK$0.05, compared to the most recent full-year payment of HK$0.06. This implies that the company grew its distributions at a yearly rate of about 2.6% over that duration. We're glad to see the dividend has risen, but with a limited rate of growth and fluctuations in the payments the total shareholder return may be limited.

The Dividend Looks Likely To Grow

With a relatively unstable dividend, it's even more important to see if earnings per share is growing. We are encouraged to see that Yan Tat Group Holdings has grown earnings per share at 15% per year over the past five years. A low payout ratio and decent growth suggests that the company is reinvesting well, and it also has plenty of room to increase the dividend over time.

In Summary

In summary, while it's good to see that the dividend hasn't been cut, we are a bit cautious about Yan Tat Group Holdings' 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.

It's important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. For example, we've picked out 2 warning signs for Yan Tat Group Holdings that investors should know about before committing capital to this stock. Is Yan Tat Group Holdings not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.