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Regular readers will know we love our dividends at Simply Wall St, which is why it’s exciting to see Steamships Trading Company Limited (ASX: SST) is set to trade ex-dividend within the next 4 days. You will need to buy shares before April 29 to receive the dividend, which will be paid on July 30.
Steamships Trading’s next dividend payment will be K 0.80 per share. Last year, in total, the company distributed K0.80 to shareholders. Based on last year’s payouts, the Steamships Trading share has a trailing yield of around 3.3% on the current share price of $ 9A. Dividends are a major source of income for many shareholders, but the health of the company is critical to sustaining these dividends. As a result, readers should always check to see if Steamships Trading was able to increase its dividends or if the dividend could be reduced.
Check out our latest review for Steamships Trading
If a company pays more in dividends than it has earned, then the dividend can become unsustainable – hardly an ideal situation. Steamships Trading paid a comfortable 31% of its profits last year. Still, cash flow is usually more important than profit in assessing dividend sustainability, so we always need to check whether the company has generated enough cash to pay its dividend. Fortunately, he only paid 21% of his free cash flow last year.
It is positive to see that the Steamships Trading dividend is covered by both earnings and cash flow, as this is usually a sign that the dividend is sustainable, and a lower payout ratio usually suggests a larger margin. security before the dividend is reduced.
Click here to see how much of his Steamships Trading profits paid in the last 12 months.
Have profits and dividends increased?
Companies with declining profits are tricky from a dividend standpoint. If profits fall enough, the company could be forced to cut its dividend. This is why it is not ideal to see Steamships Trading earnings per share decline by 4.4% per year over the past five years.
Many investors will assess a company’s dividend yield by evaluating how much dividend payments have changed over time. Steamships Trading has seen its dividend fall by 5.2% per annum on average over the past 10 years, which is not great to see. It’s never nice to watch profits and dividends go down, but at least management has reduced the dividend rather than potentially risking the health of the company in an attempt to maintain it.
Final takeaway
Is Steamships Trading an attractive dividend-paying stock, or is it better to stay on the shelves? Earnings per share are down significantly, even though at least the company is paying a small and conservative percentage of its earnings and cash flow. It’s certainly not great to see the profits go down, but at least there can be a buffer before the dividend has to be cut. Overall, we are not extremely bearish on the stock, but there are probably better dividend investments.
So while Steamships Trading looks good from a dividend standpoint, it is still worth being aware of the risks involved with this stock. Our analysis shows 2 warning signs for Steamships Trading which we strongly recommend that you consult before investing in the company.
If you are looking for dividend paying stocks, we recommend that you take a look at our list of top dividend paying stocks with a yield above 2% and a future dividend.
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This Simply Wall St article is general in nature. It is not a recommendation to buy or sell any stock, and does not take into account your goals or your financial situation. We aim to bring you long-term, targeted analysis based on fundamental data. Note that our analysis may not take into account the latest announcements from price sensitive companies or qualitative information. Simply Wall St has no position in the mentioned stocks.
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