Credit Bureau Asia (SGX:TCU) Is Paying Out A Dividend Of SGD0.02

The board of Credit Bureau Asia Limited (SGX:TCU) has announced that it will pay a dividend on the 29th of August, with investors receiving SGD0.02 per share. The dividend yield is 3.0% based on this payment, which is a little bit low compared to the other companies in the industry.

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Credit Bureau Asia's Projected Earnings Seem Likely To Cover Future Distributions

While yield is important, another factor to consider about a company's dividend is whether the current payout levels are feasible. The last payment made up 86% of earnings, but cash flows were much higher. In general, cash flows are more important than earnings, so we are comfortable that the dividend will be sustainable going forward, especially with so much cash left over for reinvestment.

EPS is set to grow by 4.8% over the next year if recent trends continue. Assuming the dividend continues along recent trends, our estimates say the payout ratio could reach 83%, which is definitely on the higher side, but we wouldn't necessarily say this is unsustainable.

Check out our latest analysis for Credit Bureau Asia

Credit Bureau Asia Is Still Building Its Track Record

Looking back, the dividend has been stable, but the company hasn't been paying a dividend for very long so we can't be confident that the dividend will remain stable through all economic environments. The annual payment during the last 4 years was SGD0.034 in 2021, and the most recent fiscal year payment was SGD0.04. This means that it has been growing its distributions at 4.1% per annum over that time. Modest dividend growth is good to see, especially with the payments being relatively stable. However, the payment history is relatively short and we wouldn't want to rely on this dividend too much.

Dividend Growth May Be Hard To Achieve

The company's investors will be pleased to have been receiving dividend income for some time. Earnings have grown at around 4.8% a year for the past five years, which isn't massive but still better than seeing them shrink. Credit Bureau Asia's earnings per share has barely grown, which is not ideal - perhaps this is why the company pays out the majority of its earnings to shareholders. This isn't the end of the world, but for investors looking for strong dividend growth they may want to look elsewhere.

Our Thoughts On Credit Bureau Asia's Dividend

In summary, while it's good to see that the dividend hasn't been cut, we are a bit cautious about Credit Bureau Asia's payments, as there could be some issues with sustaining them into the future. The company is generating plenty of cash, which could maintain the dividend for a while, but the track record hasn't been great. We would probably look elsewhere for an income investment.

Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. You can also discover whether shareholders are aligned with insider interests by checking our visualisation of insider shareholdings and trades in Credit Bureau Asia stock. 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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