DBS Group Holdings Ltd (SGX:D05) is about to trade ex-dividend in the next three days.  Typically, the ex-dividend date is one business day before the record date which is the date on which a company determines the shareholders eligible 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.   In other words, investors can purchase DBS Group Holdings' shares before the 9th of May in order to be eligible for the dividend, which will be paid on the 20th of May.  

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$1.96 to shareholders.  Based on the last year's worth of payments, DBS Group Holdings stock has a trailing yield of around 5.5% on the current share price of S$35.64.    We love seeing companies pay a dividend, but it's also important to be sure that laying the golden eggs isn't going to kill our golden goose!  We need to see whether the dividend is covered by earnings and if it's growing.

Dividends are typically paid from company earnings. If a company pays more in dividends than it earned in profit, then the dividend could be unsustainable.   DBS Group Holdings is paying out an acceptable 51% of its profit, a common payout level among most companies.  

Companies that pay out less in dividends than they earn in profits generally have more sustainable dividends. The lower the payout ratio, the more wiggle room the business has before it could be forced to cut the dividend.

Click here to see the company's payout ratio, plus analyst estimates of its future dividends.

SGX:D05 Historic Dividend May 5th 2024

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.   If business enters a downturn and the dividend is cut, the company could see its value fall precipitously.     For this reason, we're glad to see DBS Group Holdings's earnings per share have risen 13% per annum over the last five years.    

Many investors will assess a company's dividend performance by evaluating how much the dividend payments have changed over time.     Since the start of our data, 10 years ago, DBS Group Holdings has lifted its dividend by approximately 14% a year on average.      It's exciting to see that both earnings and dividends per share have grown rapidly over the past few years.  

The Bottom Line

Is DBS Group Holdings worth buying for its dividend?      DBS Group Holdings has an acceptable payout ratio and its earnings per share have been improving at a decent rate.        Overall, DBS Group Holdings looks like a promising dividend stock in this analysis, and we think it would be worth investigating further.  

In light of that, while DBS Group Holdings has an appealing dividend, it's worth knowing the risks involved with this stock.     For example - DBS Group Holdings has 1 warning sign we think you should be aware of.  

Generally, we wouldn't recommend just buying the first dividend stock you see. Here's a curated list of interesting stocks that are strong dividend payers.

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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.