Credit Bureau Asia (SGX:TCU) Is Due To Pay A Dividend Of SGD0.017

Credit Bureau Asia Limited (SGX:TCU) will pay a dividend of SGD0.017 on the 19th of May. This makes the dividend yield 3.5%, which will augment investor returns quite nicely.

View our latest analysis for Credit Bureau Asia

Credit Bureau Asia's Dividend Is Well Covered By Earnings

If the payments aren't sustainable, a high yield for a few years won't matter that much. Prior to this announcement, Credit Bureau Asia's earnings easily covered the dividend, but free cash flows were negative. We think that cash flows should take priority over earnings, so this is definitely a worry for the dividend going forward.

Over the next year, EPS is forecast to expand by 14.4%. Assuming the dividend continues along recent trends, our estimates say the payout ratio could reach 81% - on the higher side, but we wouldn't necessarily say this is unsustainable.

Credit Bureau Asia Doesn't Have A Long Payment History

It is tough to make a judgement on how stable a dividend is when the company hasn't been paying one for very long. This doesn't mean that the company can't pay a good dividend, but just that we want to wait until it can prove itself.

The Dividend Has Growth Potential

The company's investors will be pleased to have been receiving dividend income for some time. We are encouraged to see that Credit Bureau Asia has grown earnings per share at 7.2% per year over the past five years. Credit Bureau Asia definitely has the potential to grow its dividend in the future with earnings on an uptrend and a low payout ratio.

Our Thoughts On Credit Bureau Asia's Dividend

Overall, we don't think this company makes a great dividend stock, even though the dividend wasn't cut this year. While Credit Bureau Asia is earning enough to cover the payments, the cash flows are lacking. 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. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. As an example, we've identified 2 warning signs for Credit Bureau Asia that you should be aware of before investing. Is Credit Bureau Asia not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

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