The board of GuocoLand Limited (SGX:F17) has announced that it will pay a dividend on the 15th of November, with investors receiving SGD0.06 per share. This means that the annual payment will be 3.6% 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 like a dividend to be consistent over the long term, so checking whether it is sustainable is important. GuocoLand is quite easily earning enough to cover the dividend, however it is being let down by weak cash flows. With the company not bringing in any cash, paying out to shareholders is bound to become difficult at some point.
If the trend of the last few years continues, EPS will grow by 1.2% over the next 12 months. If the dividend continues along recent trends, we estimate the payout ratio will be 18%, which is in the range that makes us comfortable with the sustainability of the dividend.
GuocoLand Has A Solid Track Record
The company has been paying a dividend for a long time, and it has been quite stable which gives us confidence in the future dividend potential. The annual payment during the last 10 years was SGD0.05 in 2012, and the most recent fiscal year payment was SGD0.06. This works out to be a compound annual growth rate (CAGR) of approximately 1.8% a year over that time. Although we can't deny that the dividend has been remarkably stable in the past, the growth has been pretty muted.
Dividend Growth May Be Hard To Achieve
The company's investors will be pleased to have been receiving dividend income for some time. Unfortunately, GuocoLand's earnings per share has been essentially flat over the past five years, which means the dividend may not be increased each year. If GuocoLand is struggling to find viable investments, it always has the option to increase its payout ratio to pay more to shareholders.
Our Thoughts On GuocoLand's Dividend
Overall, we don't think this company makes a great dividend stock, even though the dividend wasn't cut this year. While GuocoLand is earning enough to cover the payments, the cash flows are lacking. This company is not in the top tier of income providing stocks.
Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. Just as an example, we've come across 3 warning signs for GuocoLand you should be aware of, and 2 of them are potentially serious. Looking for more high-yielding dividend ideas? Try our collection of 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.
About SGX:F17
GuocoLand
An investment holding company, engages in the property investment and development business.
Established dividend payer slight.
