Singapore Land Group Limited (SGX:U06) Looks Like A Good Stock, And It's Going Ex-Dividend Soon

Singapore Land Group Limited (SGX:U06) is about to trade ex-dividend in the next three days. The ex-dividend date is one business day before a company's record date, which is the date on which the company determines which shareholders are entitled 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. Thus, you can purchase Singapore Land Group's shares before the 4th of May in order to receive the dividend, which the company will pay on the 26th of May.

The company's next dividend payment will be S$0.035 per share, on the back of last year when the company paid a total of S$0.035 to shareholders. Looking at the last 12 months of distributions, Singapore Land Group has a trailing yield of approximately 1.6% on its current stock price of SGD2.19. Dividends are a major contributor to investment returns for long term holders, but only if the dividend continues to be paid. So we need to check whether the dividend payments are covered, and if earnings are growing.

See our latest analysis for Singapore Land Group

Dividends are typically paid from company earnings. If a company pays more in dividends than it earned in profit, then the dividend could be unsustainable. Singapore Land Group paid out just 11% of its profit last year, which we think is conservatively low and leaves plenty of margin for unexpected circumstances. A useful secondary check can be to evaluate whether Singapore Land Group generated enough free cash flow to afford its dividend. What's good is that dividends were well covered by free cash flow, with the company paying out 20% of its cash flow last year.

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 Singapore Land Group paid out over the last 12 months.

Have Earnings And Dividends Been Growing?

Companies with consistently growing earnings per share generally make the best dividend stocks, as they usually find it easier to grow dividends per share. If earnings decline and the company is forced to cut its dividend, investors could watch the value of their investment go up in smoke. This is why it's a relief to see Singapore Land Group earnings per share are up 8.8% per annum over the last five years. Earnings per share have been growing at a decent rate, and the company is retaining more than three-quarters of its earnings in the business. If profits are reinvested effectively, this could be a bullish combination for future earnings and dividends.

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, Singapore Land Group has lifted its dividend by approximately 1.6% a year on average.

Final Takeaway

From a dividend perspective, should investors buy or avoid Singapore Land Group? Earnings per share have been growing moderately, and Singapore Land Group is paying out less than half its earnings and cash flow as dividends, which is an attractive combination as it suggests the company is investing in growth. We would prefer to see earnings growing faster, but the best dividend stocks over the long term typically combine significant earnings per share growth with a low payout ratio, and Singapore Land Group is halfway there. Singapore Land Group looks solid on this analysis overall, and we'd definitely consider investigating it more closely.

While it's tempting to invest in Singapore Land Group for the dividends alone, you should always be mindful of the risks involved. To help with this, we've discovered 1 warning sign for Singapore Land Group that you should be aware of before investing in their shares.

Generally, we wouldn't recommend just buying the first dividend stock you see. Here's a curated list of interesting stocks that are strong dividend payers.

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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.