13-12-2012, 02:12 PM
(13-12-2012, 10:17 AM)KopiKat Wrote:Oops! I missed that prior discussion. Apologies for re-stating this risk.(13-12-2012, 12:49 AM)Willow_Will Wrote: Hi folks,
I've been an SPH shareholder since 2005 (I can honestly tell you that the annual returns from holding this counter will never secure you a place in investing lore). There has been a gradual decline in earnings during recent years and I'm wondering if the current dividend yield (gross + special) is sustainable.
The current 24c dividend for FY12 already results in a payout ratio of >1.0. I conservatively assume that future dividends will exclude the special component, yielding a 16c annual gross dividend at a payout ratio of around 0.70 (which is already high). Given that SPH has a reputation of being an "income" counter with minimal prospect for growth, a substantial cut in the dividend will depress SPH's stock price. This will be a double whammy for SPH faithfuls.
We were discussing about this risk from Pg 41 of this thread.

With respect to SBS Transit, if I remember correctly, the high special dividends paid were due to the company utilizing its section 44 balances? On hindsight, the appropriate gameplay then would be to "run road" once all the section 44 credits were exhausted.
