SmarTone Telecommunications Holdings (HKG:315) Has Re-Affirmed Its Dividend Of HK$0.14

The board of SmarTone Telecommunications Holdings Limited (HKG:315) has announced that it will pay a dividend on the 18th of March, with investors receiving HK$0.14 per share. The dividend yield will be 6.7% based on this payment which is still above the industry average.

See our latest analysis for SmarTone Telecommunications Holdings

SmarTone Telecommunications Holdings' Dividend Is Well Covered By Earnings

A big dividend yield for a few years doesn't mean much if it can't be sustained. The last dividend was quite easily covered by SmarTone Telecommunications Holdings' earnings. This means that a large portion of its earnings are being retained to grow the business.

EPS is set to fall by 12.6% over the next 12 months. Assuming the dividend continues along recent trends, we think the payout ratio could reach 76%, which is definitely on the higher side.

Dividend Volatility

The company's dividend history has been marked by instability, with at least 1 cut in the last 10 years. The first annual payment during the last 10 years was HK$0.84 in 2012, and the most recent fiscal year payment was HK$0.30. Doing the maths, this is a decline of about 9.8% per year. Declining dividends isn't generally what we look for as they can indicate that the company is running into some challenges.

Dividend Growth Potential Is Shaky

Dividends have been going in the wrong direction, so we definitely want to see a different trend in the earnings per share. SmarTone Telecommunications Holdings' EPS has fallen by approximately 12% per year during the past five years. This steep decline can indicate that the business is going through a tough time, which could constrain its ability to pay a larger dividend each year in the future.

Our Thoughts On SmarTone Telecommunications Holdings' Dividend

In summary, while it's good to see that the dividend hasn't been cut, we are a bit cautious about SmarTone Telecommunications Holdings' payments, as there could be some issues with sustaining them into the future. In the past, the payments have been unstable, but over the short term the dividend could be reliable, with the company generating enough cash to cover it. Overall, we don't think this company has the makings of a good income stock.

Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. As an example, we've identified 1 warning sign for SmarTone Telecommunications 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.

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.