APT Satellite Holdings Limited (HKG:1045) Is About To Go Ex-Dividend, And It Pays A 5.2% Yield

It looks like APT Satellite Holdings Limited (HKG:1045) is about to go ex-dividend in the next 4 days. The ex-dividend date generally occurs two days 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 because any transaction on a stock needs to have been settled before the record date in order to be eligible for a dividend. This means that investors who purchase APT Satellite Holdings' shares on or after the 22nd of September will not receive the dividend, which will be paid on the 14th of October.

The company's next dividend payment will be HK$0.025 per share. Last year, in total, the company distributed HK$0.11 to shareholders. Based on the last year's worth of payments, APT Satellite Holdings stock has a trailing yield of around 5.2% on the current share price of HK$2.13. If you buy this business for its dividend, you should have an idea of whether APT Satellite Holdings's dividend is reliable and sustainable. We need to see whether the dividend is covered by earnings and if it's growing.

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Dividends are usually paid out of company profits, so if a company pays out more than it earned then its dividend is usually at greater risk of being cut. Fortunately APT Satellite Holdings's payout ratio is modest, at just 46% of profit. A useful secondary check can be to evaluate whether APT Satellite Holdings generated enough free cash flow to afford its dividend. The good news is it paid out just 24% of its free cash flow in the last year.

It's encouraging to see that the dividend is covered by both profit and cash flow. This generally suggests the dividend is sustainable, as long as earnings don't drop precipitously.

View our latest analysis for APT Satellite Holdings

Click here to see how much of its profit APT Satellite Holdings paid out over the last 12 months.

Have Earnings And Dividends Been Growing?

When earnings decline, dividend companies become much harder to analyse and own safely. If earnings decline and the company is forced to cut its dividend, investors could watch the value of their investment go up in smoke. APT Satellite Holdings's earnings per share have fallen at approximately 13% a year over the previous five years. Such a sharp decline casts doubt on the future sustainability of the dividend.

Many investors will assess a company's dividend performance by evaluating how much the dividend payments have changed over time. In the last 10 years, APT Satellite Holdings has lifted its dividend by approximately 3.2% a year on average.

To Sum It Up

Is APT Satellite Holdings worth buying for its dividend? Earnings per share are down meaningfully, although at least the company is paying out a low and conservative percentage of both its earnings and cash flow. It's definitely not great to see earnings falling, but at least there may be some buffer before the dividend needs to be cut. In summary, while it has some positive characteristics, we're not inclined to race out and buy APT Satellite Holdings today.

So while APT Satellite Holdings looks good from a dividend perspective, it's always worthwhile being up to date with the risks involved in this stock. Every company has risks, and we've spotted 2 warning signs for APT Satellite Holdings (of which 1 doesn't sit too well with us!) you should know about.

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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.