APT Satellite Holdings Limited (HKG:1045) Stock Goes Ex-Dividend In Just Three Days

By
Simply Wall St
Published
September 11, 2021
SEHK:1045
Source: Shutterstock

APT Satellite Holdings Limited (HKG:1045) stock is about to trade ex-dividend in three days. The ex-dividend date is usually set to be one business day before the record date which is the cut-off date on which you must be present on the company's books as a shareholder in order to receive the dividend. The ex-dividend date is an important date to be aware of as any purchase of the stock made on or after this date might mean a late settlement that doesn't show on the record date. Therefore, if you purchase APT Satellite Holdings' shares on or after the 16th of September, you won't be eligible to receive the dividend, when it is paid on the 11th of October.

The company's next dividend payment will be HK$0.04 per share, and in the last 12 months, the company paid a total of HK$0.23 per share. Based on the last year's worth of payments, APT Satellite Holdings has a trailing yield of 8.9% on the current stock price of HK$2.57. Dividends are an important source of income to many shareholders, but the health of the business is crucial to maintaining those dividends. So we need to check whether the dividend payments are covered, and if earnings are growing.

Check out our latest analysis for APT Satellite Holdings

Dividends are typically paid from company earnings. If a company pays more in dividends than it earned in profit, then the dividend could be unsustainable. Its dividend payout ratio is 78% of profit, which means the company is paying out a majority of its earnings. The relatively limited profit reinvestment could slow the rate of future earnings growth. We'd be concerned if earnings began to decline. Yet cash flow is typically more important than profit for assessing dividend sustainability, so we should always check if the company generated enough cash to afford its dividend. Fortunately, it paid out only 39% of its free cash flow in the past year.

It's encouraging to see that the dividend is covered by both profit and cash flow. This generally suggests the dividend is sustainable, as long as earnings don't drop precipitously.

Click here to see how much of its profit APT Satellite Holdings paid out over the last 12 months.

historic-dividend
SEHK:1045 Historic Dividend September 12th 2021

Have Earnings And Dividends Been Growing?

Companies with falling earnings are riskier for dividend shareholders. If business enters a downturn and the dividend is cut, the company could see its value fall precipitously. APT Satellite Holdings's earnings per share have fallen at approximately 12% a year over the previous five years. When earnings per share fall, the maximum amount of dividends that can be paid also falls.

Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. In the last 10 years, APT Satellite Holdings has lifted its dividend by approximately 24% a year on average. That's intriguing, but the combination of growing dividends despite declining earnings can typically only be achieved by paying out a larger percentage of profits. APT Satellite Holdings is already paying out 78% of its profits, and with shrinking earnings we think it's unlikely that this dividend will grow quickly in the future.

The Bottom Line

Is APT Satellite Holdings worth buying for its dividend? We're not enthused by the declining earnings per share, although at least the company's payout ratio is within a reasonable range, meaning it may not be at imminent risk of a dividend cut. To summarise, APT Satellite Holdings looks okay on this analysis, although it doesn't appear a stand-out opportunity.

If you want to look further into APT Satellite Holdings, it's worth knowing the risks this business faces. Our analysis shows 2 warning signs for APT Satellite Holdings that we strongly recommend you have a look at before investing in the company.

We wouldn't recommend just buying the first dividend stock you see, though. Here's a list of interesting dividend stocks with a greater than 2% yield and an upcoming dividend.

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