Yahoo Finance Why You Might Be Interested In DBS Group Holdings Ltd (SGX:D05) For Its Upcoming Dividend
It looks like DBS Group Holdings Ltd (SGX:D05) is about to go ex-dividend in the next 2 days. The ex-dividend date occurs one day before the record date which is the day on which shareholders need to be on the company's books in order to receive a dividend. The ex-dividend date is important as the process of settlement involves two full business days. So if you miss that date, you would not show up on the company's books on the record date. Accordingly, DBS Group Holdings investors that purchase the stock on or after the 5th of April will not receive the dividend, which will be paid on the 19th of April.
The company's next dividend payment will be S$0.54 per share, on the back of last year when the company paid a total of S$2.16 to shareholders. Based on the last year's worth of payments, DBS Group Holdings stock has a trailing yield of around 6.0% on the current share price of S$36.20. If you buy this business for its dividend, you should have an idea of whether DBS Group Holdings's dividend is reliable and sustainable. So we need to investigate whether DBS Group Holdings can afford its dividend, and if the dividend could grow.
Check out our latest analysis for DBS Group Holdings
Dividends are typically paid out of company income, so if a company pays out more than it earned, its dividend is usually at a higher risk of being cut. Fortunately DBS Group Holdings's payout ratio is modest, at just 50% of profit.
When a company paid out less in dividends than it earned in profit, this generally suggests its dividend is affordable. The lower the % of its profit that it pays out, the greater the margin of safety for the dividend if the business enters a downturn.
Click here to see the company's payout ratio, plus analyst estimates of its future dividends.
Have Earnings And Dividends Been Growing?
Companies with consistently growing earnings per share generally make the best dividend stocks, as they usually find it easier to grow dividends per share. Investors love dividends, so if earnings fall and the dividend is reduced, expect a stock to be sold off heavily at the same time. For this reason, we're glad to see DBS Group Holdings's earnings per share have risen 12% per annum over the last five years.
The main way most investors will assess a company's dividend prospects is by checking the historical rate of dividend growth. DBS Group Holdings has delivered 14% dividend growth per year on average over the past 10 years. It's great to see earnings per share growing rapidly over several years, and dividends per share growing right along with it.
To Sum It Up
Is DBS Group Holdings worth buying for its dividend? Typically, companies that are growing rapidly and paying out a low fraction of earnings are keeping the profits for reinvestment in the business. Perhaps even more importantly - this can sometimes signal management is focused on the long term future of the business. In summary, DBS Group Holdings appears to have some promise as a dividend stock, and we'd suggest taking a closer look at it.
On that note, you'll want to research what risks DBS Group Holdings is facing. In terms of investment risks, we've identified 1 warning sign with DBS Group Holdings and understanding them should be part of your investment process.
A common investing mistake is buying the first interesting stock you see. Here you can find a full list of high-yield dividend stocks.
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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.
