Yan Tat Group Holdings (HKG:1480) Has Announced A Dividend Of HK$0.06

The board of Yan Tat Group Holdings Limited (HKG:1480) has announced that it will pay a dividend on the 6th of July, with investors receiving HK$0.06 per share. This means that the annual payment will be 4.9% of the current stock price, which is in line with the average for the industry.

Check out our latest analysis for Yan Tat Group Holdings

Yan Tat Group Holdings' Earnings Easily Cover the Distributions

Solid dividend yields are great, but they only really help us if the payment is sustainable. However, prior to this announcement, Yan Tat Group Holdings' dividend was comfortably covered by both cash flow and earnings. This means that most of what the business earns is being used to help it grow.

Looking forward, earnings per share could rise by 14.6% over the next year if the trend from the last few years continues. If the dividend continues along recent trends, we estimate the payout ratio will be 30%, which is in the range that makes us comfortable with the sustainability of the dividend.

Yan Tat Group Holdings' Dividend Has Lacked Consistency

Looking back, Yan Tat Group Holdings' dividend hasn't been particularly consistent. This makes us cautious about the consistency of the dividend over a full economic cycle. Since 2015, the first annual payment was HK$0.05, compared to the most recent full-year payment of HK$0.06. This works out to be a compound annual growth rate (CAGR) of approximately 2.6% a year over that time. Modest growth in the dividend is good to see, but we think this is offset by historical cuts to the payments. It is hard to live on a dividend income if the company's earnings are not consistent.

The Dividend Looks Likely To Grow

With a relatively unstable dividend, it's even more important to see if earnings per share is growing. It's encouraging to see Yan Tat Group Holdings has been growing its earnings per share at 15% a 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.

Yan Tat Group Holdings Looks Like A Great Dividend Stock

Overall, we like to see the dividend staying consistent, and we think Yan Tat Group Holdings might even raise payments in the future. Distributions are quite easily covered by earnings, which are also being converted to cash flows. All in all, this checks a lot of the boxes we look for when choosing an income stock.

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. As an example, we've identified 2 warning signs for Yan Tat Group Holdings that you should be aware of before investing. Is Yan Tat Group 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.