Bonvests Holdings' (SGX:B28) Dividend Will Be Increased To SGD0.016

Bonvests Holdings Limited's (SGX:B28) dividend will be increasing from last year's payment of the same period to SGD0.016 on 26th of May. Although the dividend is now higher, the yield is only 1.6%, which is below the industry average.

Check out our latest analysis for Bonvests Holdings

Bonvests Holdings' Payment Has Solid Earnings Coverage

The dividend yield is a little bit low, but sustainability of the payments is also an important part of evaluating an income stock. Before making this announcement, Bonvests Holdings was easily earning enough to cover the dividend. This means that most of what the business earns is being used to help it grow.

Looking forward, earnings per share could rise by 9.4% over the next year if the trend from the last few years continues. If the dividend continues on this path, the payout ratio could be 24% by next year, which we think can be pretty sustainable going forward.

Dividend Volatility

The company's dividend history has been marked by instability, with at least one cut in the last 10 years. The dividend has gone from an annual total of SGD0.012 in 2013 to the most recent total annual payment of SGD0.016. This implies that the company grew its distributions at a yearly rate of about 2.9% over that duration. It's encouraging to see some dividend growth, but the dividend has been cut at least once, and the size of the cut would eliminate most of the growth anyway, which makes this less attractive as an income investment.

The Dividend Has Growth Potential

Growing earnings per share could be a mitigating factor when considering the past fluctuations in the dividend. We are encouraged to see that Bonvests Holdings has grown earnings per share at 9.4% per year over the past five years. With a decent amount of growth and a low payout ratio, we think this bodes well for Bonvests Holdings' prospects of growing its dividend payments in the future.

Bonvests Holdings Looks Like A Great Dividend Stock

Overall, a dividend increase is always good, and we think that Bonvests Holdings is a strong income stock thanks to its track record and growing earnings. The company is easily earning enough to cover its dividend payments and it is great to see that these earnings are being translated into cash flow. All of these factors considered, we think this has solid potential as a dividend stock.

Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. However, there are other things to consider for investors when analysing stock performance. Case in point: We've spotted 3 warning signs for Bonvests Holdings (of which 2 make us uncomfortable!) you should know about. Is Bonvests Holdings not quite the opportunity you were looking for? Why not check out our selection of top 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.

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