Pan-United (SGX:P52) Is Increasing Its Dividend To SGD0.023

Pan-United Corporation Ltd (SGX:P52) will increase its dividend on the 16th of May to SGD0.023, which is 28% higher than last year's payment from the same period of SGD0.018. This makes the dividend yield about the same as the industry average at 4.8%.

We've discovered 1 warning sign about Pan-United. View them for free.

Pan-United's Projected Earnings Seem Likely To Cover Future Distributions

Unless the payments are sustainable, the dividend yield doesn't mean too much. Prior to this announcement, Pan-United's dividend was comfortably covered by both cash flow and earnings. This means that a large portion of its earnings are being retained to grow the business.

The next year is set to see EPS grow by 46.2%. If the dividend continues on this path, the payout ratio could be 32% by next year, which we think can be pretty sustainable going forward.

View our latest analysis for Pan-United

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 SGD0.0425 in 2015, and the most recent fiscal year payment was SGD0.03. This works out to be a decline of approximately 3.4% per year over that time. Generally, we don't like to see a dividend that has been declining over time as this can degrade shareholders' returns and indicate that the company may be running into problems.

The Dividend Looks Likely To Grow

Given that the dividend has been cut in the past, we need to check if earnings are growing and if that might lead to stronger dividends in the future. Pan-United has seen EPS rising for the last five years, at 15% per annum. Earnings are on the uptrend, and it is only paying a small portion of those earnings to shareholders.

Pan-United Looks Like A Great Dividend Stock

Overall, a dividend increase is always good, and we think that Pan-United is a strong income stock thanks to its track record and growing earnings. Earnings are easily covering distributions, and the company is generating plenty of cash. All of these factors considered, we think this has solid potential as a dividend stock.

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. For example, we've picked out 1 warning sign for Pan-United that investors should know about before committing capital to this stock. If you are a dividend investor, you might also want to look at our curated list of high yield dividend stocks.