Pan-United (SGX:P52) Has Announced A Dividend Of SGD0.01
Pan-United Corporation Ltd (SGX:P52) has announced a dividend of SGD0.01 per share, payable on September 5. Despite a 55% stock price increase over the last three months, the dividend yield stands at a modest 2.7%. The company has a history of dividend cuts, with a declining trend over the years. While earnings per share have grown at 30% annually, concerns remain about the sustainability of future dividends due to cash flow issues. Overall, Pan-United may not be an ideal choice for income-focused investors.
The board of Pan-United Corporation Ltd (SGX:P52) has announced that it will pay a dividend of SGD0.01 per share on the 5th of September. Despite this raise, the dividend yield of 2.7% is only a modest boost to shareholder returns.
While the dividend yield is important for income investors, it is also important to consider any large share price moves, as this will generally outweigh any gains from distributions. Investors will be pleased to see that Pan-United's stock price has increased by 55% in the last 3 months, which is good for shareholders and can also explain a decrease in the dividend yield.
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Pan-United's Future Dividend Projections Appear Well Covered By Earnings
If it is predictable over a long period, even low dividend yields can be attractive. Based on the last dividend, Pan-United is earning enough to cover the payment, but then it makes up 102% of cash flows. This signals that the company is more focused on returning cash flow to shareholders, but it could mean that the dividend is exposed to cuts in the future.
Over the next year, EPS is forecast to expand by 69.3%. Assuming the dividend continues along recent trends, we think the payout ratio could be 29% by next year, which is in a pretty sustainable range.
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 dividend has gone from an annual total of SGD0.0425 in 2015 to the most recent total annual payment of SGD0.03. The dividend has shrunk at around 3.4% a year during that period. Declining dividends isn't generally what we look for as they can indicate that the company is running into some challenges.
The Dividend Looks Likely To Grow
With a relatively unstable dividend, it's even more important to evaluate if earnings per share is growing, which could point to a growing dividend in the future. We are encouraged to see that Pan-United has grown earnings per share at 30% per year over the past five years. 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.
In Summary
Overall, this is probably not a great income stock, even though the dividend is being raised at the moment. With cash flows lacking, it is difficult to see how the company can sustain a dividend payment. We don't think Pan-United is a great stock to add to your portfolio if income is your focus.
Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. Taking the debate a bit further, we've identified 1 warning sign for Pan-United that investors need to be conscious of moving forward. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.
