Stock Analysis

LHT Holdings Limited (SGX:BEI) Stock Goes Ex-Dividend In Just Two Days

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LHT Holdings Limited (SGX:BEI) stock is about to trade ex-dividend in 2 days. The ex-dividend date occurs one day before the record date which is the day on which shareholders need to be on the company's books in order to receive a dividend. It is important to be aware of the ex-dividend date because any trade on the stock needs to have been settled on or before the record date. Therefore, if you purchase LHT Holdings' shares on or after the 17th of May, you won't be eligible to receive the dividend, when it is paid on the 30th of May.

The company's next dividend payment will be S$0.18 per share. Last year, in total, the company distributed S$0.05 to shareholders. Calculating the last year's worth of payments shows that LHT Holdings has a trailing yield of 3.7% on the current share price of S$1.36. If you buy this business for its dividend, you should have an idea of whether LHT Holdings's dividend is reliable and sustainable. As a result, readers should always check whether LHT Holdings has been able to grow its dividends, or if the dividend might be cut.

See our latest analysis for LHT Holdings

If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. LHT Holdings paid out more than half (61%) of its earnings last year, which is a regular payout ratio for most companies. Yet cash flow is typically more important than profit for assessing dividend sustainability, so we should always check if the company generated enough cash to afford its dividend. Dividends consumed 63% of the company's free cash flow last year, which is within a normal range for most dividend-paying organisations.

It's encouraging to see that the dividend is covered by both profit and cash flow. This generally suggests the dividend is sustainable, as long as earnings don't drop precipitously.

Click here to see how much of its profit LHT Holdings paid out over the last 12 months.

SGX:BEI Historic Dividend May 14th 2024

Have Earnings And Dividends Been Growing?

Stocks in companies that generate sustainable earnings growth often make the best dividend prospects, as it is easier to lift the dividend when earnings are rising. If earnings decline and the company is forced to cut its dividend, investors could watch the value of their investment go up in smoke. With that in mind, we're encouraged by the steady growth at LHT Holdings, with earnings per share up 4.9% on average over the last five years. Earnings per share growth has been slim, and the company is already paying out a majority of its earnings. While there is some room to both increase the payout ratio and reinvest in the business, generally the higher a payout ratio goes, the lower a company's prospects for future growth.

The main way most investors will assess a company's dividend prospects is by checking the historical rate of dividend growth. In the last 10 years, LHT Holdings has lifted its dividend by approximately 9.6% a year on average. It's encouraging to see the company lifting dividends while earnings are growing, suggesting at least some corporate interest in rewarding shareholders.

Final Takeaway

Is LHT Holdings an attractive dividend stock, or better left on the shelf? Earnings per share have been growing modestly and LHT Holdings paid out a bit over half of its earnings and free cash flow last year. Overall we're not hugely bearish on the stock, but there are likely better dividend investments out there.

If you want to look further into LHT Holdings, it's worth knowing the risks this business faces. Our analysis shows 2 warning signs for LHT Holdings and you should be aware of these before buying any shares.

A common investing mistake is buying the first interesting stock you see. Here you can find a full list of high-yield dividend stocks.

Valuation is complex, but we're helping make it simple.

Find out whether LHT Holdings is potentially over or undervalued by checking out our comprehensive analysis, which includes fair value estimates, risks and warnings, dividends, insider transactions and financial health.

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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.