Yan Tat Group Holdings' (HKG:1480) Shareholders Will Receive A Smaller Dividend Than Last Year

Yan Tat Group Holdings Limited (HKG:1480) has announced that on 4th of July, it will be paying a dividend ofHK$0.10, which a reduction from last year's comparable dividend. However, the dividend yield of 9.4% is still a decent boost to shareholder returns.

View our latest analysis for Yan Tat Group Holdings

Yan Tat Group Holdings' Dividend Is Well Covered By Earnings

If the payments aren't sustainable, a high yield for a few years won't matter that much. However, Yan Tat Group Holdings' earnings easily cover the dividend. As a result, a large proportion of what it earned was being reinvested back into the business.

Looking forward, earnings per share could rise by 5.2% over the next year if the trend from the last few years continues. If the dividend continues on this path, the payout ratio could be 35% by next year, which we think can be pretty sustainable going forward.

Yan Tat Group Holdings' Dividend Has Lacked Consistency

It's comforting to see that Yan Tat Group Holdings has been paying a dividend for a number of years now, however it has been cut at least once in that time. This suggests that the dividend might not be the most reliable. Since 2015, the annual payment back then was HK$0.05, compared to the most recent full-year payment of HK$0.10. This means that it has been growing its distributions at 8.0% per annum over that time. A reasonable rate of dividend growth is good to see, but we're wary that the dividend history is not as solid as we'd like, having been cut at least once.

We Could See Yan Tat Group Holdings' Dividend Growing

With a relatively unstable dividend, it's even more important to evaluate if earnings per share is growing, which could point to a growing dividend in the future. It's encouraging to see that Yan Tat Group Holdings has been growing its earnings per share at 5.2% a year over the past five years. Yan Tat Group Holdings definitely has the potential to grow its dividend in the future with earnings on an uptrend and a low payout ratio.

Our Thoughts On Yan Tat Group Holdings' Dividend

Overall, while it's not great to see that the dividend has been cut, we think the company is now in a good position to make consistent payments going into the future. The dividend has been at reasonable levels historically, but that hasn't translated into a consistent payment. Taking all of this into consideration, the dividend looks viable moving forward, but investors should be mindful that the company has pushed the boundaries of sustainability in the past and may do so again.

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. If you are a dividend investor, you might also want to look at our curated list of high yield dividend stocks.

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