The board of GuocoLand Limited (SGX:F17) has announced that it will pay a dividend on the 19th of November, with investors receiving SGD0.06 per share. This means that the annual payment will be 3.9% of the current stock price, which is in line with the average for the industry.
See our latest analysis for GuocoLand
GuocoLand's Dividend Is Well Covered By Earnings
We aren't too impressed by dividend yields unless they can be sustained over time. The last dividend was quite easily covered by GuocoLand's earnings. This means that a large portion of its earnings are being retained to grow the business.
Looking forward, EPS could fall by 14.1% if the company can't turn things around from the last few years. Assuming the dividend continues along recent trends, we believe the payout ratio could be 72%, which we are pretty comfortable with and we think is feasible on an earnings basis.
GuocoLand Has A Solid Track Record
Even over a long history of paying dividends, the company's distributions have been remarkably stable. The annual payment during the last 10 years was SGD0.05 in 2014, and the most recent fiscal year payment was SGD0.06. This implies that the company grew its distributions at a yearly rate of about 1.8% over that duration. Dividends have grown relatively slowly, which is not great, but some investors may value the relative consistency of the dividend.
The Dividend Has Limited Growth Potential
Investors could be attracted to the stock based on the quality of its payment history. However, things aren't all that rosy. GuocoLand's EPS has fallen by approximately 14% per year during the past five years. Dividend payments are likely to come under some pressure unless EPS can pull out of the nosedive it is in.
Our Thoughts On GuocoLand's Dividend
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 earnings coverage is acceptable for now, but with earnings on the decline we would definitely keep an eye on the payout ratio. The payment isn't stellar, but it could make a decent addition to a dividend portfolio.
Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. However, there are other things to consider for investors when analysing stock performance. To that end, GuocoLand has 3 warning signs (and 1 which is significant) we think you should know about. Is GuocoLand 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:F17
GuocoLand
An investment holding company, engages in the property investment and development business.
Established dividend payer slight.
