Singapore Airlines (SGX:C6L) Has Announced A Dividend Of SGD0.30

Singapore Airlines Limited's (SGX:C6L) investors are due to receive a payment of SGD0.30 per share on 27th of August. This means the annual payment is 5.4% of the current stock price, which is above the average for the industry.

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Singapore Airlines' Projected Earnings Seem Likely To Cover Future Distributions

If the payments aren't sustainable, a high yield for a few years won't matter that much. The last dividend was quite easily covered by Singapore Airlines' earnings. This indicates that quite a large proportion of earnings is being invested back into the business.

EPS is set to fall by 50.5% over the next 12 months. Assuming the dividend continues along recent trends, we think the payout ratio could reach 90%, which is definitely on the higher side.

See our latest analysis for Singapore Airlines

Dividend Volatility

The company has a long dividend track record, but it doesn't look great with cuts in the past. The annual payment during the last 10 years was SGD0.22 in 2015, and the most recent fiscal year payment was SGD0.40. This implies that the company grew its distributions at a yearly rate of about 6.2% over that duration. A reasonable rate of dividend growth is good to see, but we're wary that the dividend history is not as solid as we'd like, having been cut at least once.

The Dividend Looks Likely To Grow

With a relatively unstable dividend, it's even more important to see if earnings per share is growing. Singapore Airlines has seen EPS rising for the last five years, at 72% per annum. The company doesn't have any problems growing, despite returning a lot of capital to shareholders, which is a very nice combination for a dividend stock to have.

We Really Like Singapore Airlines' Dividend

It is generally not great to see the dividend being cut, but we don't think this should happen much if at all in the future given that Singapore Airlines has the makings of a solid income stock moving forward. The cut will allow the company to continue paying out the dividend without putting the balance sheet under pressure, which means that it could remain sustainable for longer. All in all, this checks a lot of the boxes we look for when choosing an income stock.

Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. To that end, Singapore Airlines has 3 warning signs (and 1 which doesn't sit too well with us) we think you should know about. 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.