Be Sure To Check Out APAC Realty Limited (SGX:CLN) Before It Goes Ex-Dividend

By
Simply Wall St
Published
August 25, 2021
SGX:CLN
Source: Shutterstock

Regular readers will know that we love our dividends at Simply Wall St, which is why it's exciting to see APAC Realty Limited (SGX:CLN) is about to trade ex-dividend in the next 4 days. Typically, the ex-dividend date is one business day before the record date which is the date on which a company determines the shareholders eligible to receive a dividend. The ex-dividend date is an important date to be aware of as any purchase of the stock made on or after this date might mean a late settlement that doesn't show on the record date. Thus, you can purchase APAC Realty's shares before the 30th of August in order to receive the dividend, which the company will pay on the 9th of September.

The company's next dividend payment will be S$0.065 per share, which looks like a nice increase on last year, when the company distributed a total of S$0.052 to shareholders. Dividends are an important source of income to many shareholders, but the health of the business is crucial to maintaining those dividends. We need to see whether the dividend is covered by earnings and if it's growing.

View our latest analysis for APAC Realty

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. APAC Realty paid out 72% of its earnings to investors last year, a normal payout level for most businesses. Yet cash flows are even more important than profits for assessing a dividend, so we need to see if the company generated enough cash to pay its distribution. Fortunately, it paid out only 44% of its free cash flow in the past 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 the company's payout ratio, plus analyst estimates of its future dividends.

historic-dividend
SGX:CLN Historic Dividend August 25th 2021

Have Earnings And Dividends Been Growing?

Businesses with strong growth prospects usually make the best dividend payers, because it's easier to grow dividends when earnings per share are improving. If earnings fall far enough, the company could be forced to cut its dividend. It's encouraging to see APAC Realty has grown its earnings rapidly, up 22% a year for the past five years. The current payout ratio suggests a good balance between rewarding shareholders with dividends, and reinvesting in growth. Earnings per share have been growing quickly and in combination with some reinvestment and a middling payout ratio, the stock may have decent dividend prospects going forwards.

Many investors will assess a company's dividend performance by evaluating how much the dividend payments have changed over time. Since the start of our data, three years ago, APAC Realty has lifted its dividend by approximately 38% a year on average. Both per-share earnings and dividends have both been growing rapidly in recent times, which is great to see.

The Bottom Line

From a dividend perspective, should investors buy or avoid APAC Realty? We like APAC Realty's growing earnings per share and the fact that - while its payout ratio is around average - it paid out a lower percentage of its cash flow. APAC Realty looks solid on this analysis overall, and we'd definitely consider investigating it more closely.

On that note, you'll want to research what risks APAC Realty is facing. For example - APAC Realty has 2 warning signs we think you should be aware of.

If you're in the market for dividend stocks, we recommend checking our list of top dividend stocks with a greater than 2% yield and an upcoming dividend.

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