Brook Crompton Holdings' (SGX:AWC) Dividend Will Be SGD0.02

Brook Crompton Holdings Ltd.'s (SGX:AWC) investors are due to receive a payment of SGD0.02 per share on 30th of May. Including this payment, the dividend yield on the stock will be 3.9%, which is a modest boost for shareholders' returns.

View our latest analysis for Brook Crompton Holdings

Brook Crompton Holdings' Earnings Easily Cover The Distributions

Even a low dividend yield can be attractive if it is sustained for years on end. However, prior to this announcement, Brook Crompton Holdings' dividend was comfortably covered by both cash flow and earnings. 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 2.9% over the next year if the trend from the last few years continues. Assuming the dividend continues along recent trends, we think the payout ratio could be 15% by next year, which is in a pretty sustainable range.

Brook Crompton Holdings' Dividend Has Lacked Consistency

Brook Crompton Holdings has been paying dividends for a while, but the track record isn't stellar. Due to this, we are a little bit cautious about the dividend consistency over a full economic cycle. The payments haven't really changed that much since 7 years ago. It's encouraging to see some dividend growth, but the dividend has been cut at least once, and the size of the cut would eliminate most of the growth anyway, which makes this less attractive as an income investment.

The Dividend's Growth Prospects Are Limited

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. Earnings has been rising at 2.9% per annum over the last five years, which admittedly is a bit slow. While growth may be thin on the ground, Brook Crompton Holdings could always pay out a higher proportion of earnings to increase shareholder returns.

Our Thoughts On Brook Crompton Holdings' Dividend

Overall, a consistent dividend is a good thing, and we think that Brook Crompton Holdings has the ability to continue this into the future. The dividend has been at reasonable levels historically, but that hasn't translated into a consistent payment. The payment isn't stellar, but it could make a decent addition to a dividend portfolio.

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. To that end, Brook Crompton Holdings has 3 warning signs (and 1 which is a bit unpleasant) we think you should know about. Is Brook Crompton 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.