ABR Holdings Limited's (SGX:533) investors are due to receive a payment of SGD0.01 per share on 28th of May. This means that the annual payment will be 2.7% of the current stock price, which is in line with the average for the industry.
View our latest analysis for ABR Holdings
ABR Holdings' Earnings Easily Cover The Distributions
Unless the payments are sustainable, the dividend yield doesn't mean too much. The last payment made up 71% of earnings, but cash flows were much higher. Since the dividend is just paying out cash to shareholders, we care more about the cash payout ratio from which we can see plenty is being left over for reinvestment in the business.
If the trend of the last few years continues, EPS will grow by 5.8% over the next 12 months. Assuming the dividend continues along recent trends, we think the payout ratio could be 62% by next year, which is in a pretty sustainable range.
Dividend Volatility
Although the company has a long dividend history, it has been cut at least once in the last 10 years. The annual payment during the last 10 years was SGD0.02 in 2014, and the most recent fiscal year payment was SGD0.0125. The dividend has shrunk at around 4.6% a year during that period. A company that decreases its dividend over time generally isn't what we are looking for.
ABR Holdings Could Grow Its Dividend
With a relatively unstable dividend, it's even more important to see if earnings per share is growing. ABR Holdings has impressed us by growing EPS at 5.8% per year over the past five years. The payout ratio is very much on the higher end, which could mean that the growth rate will slow down in the future, and that could flow through to the dividend as well.
In Summary
In summary, we are pleased with the dividend remaining consistent, and we think there is a good chance of this continuing in the future. The payout ratio looks good, but unfortunately the company's dividend track record isn't stellar. The payment isn't stellar, but it could make a decent addition to a dividend portfolio.
Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. For example, we've identified 3 warning signs for ABR Holdings (1 is a bit concerning!) that you should be aware of before investing. Is ABR 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.
About SGX:533
ABR Holdings
An investment holding company, manufactures and sells ice creams and related products in Singapore and Malaysia.
Proven track record and fair value.
