Many have been interested in SATS on my Dividend Stock Tracker since it yields 9%. I decide to look at it again and see if that is sustainable.
So is it sustainable? It looks like I make a mistake factoring in special dividends. To manage the expectations, it is better to exclude the special dividends if we conservative look at sustainability.
the dividend yield fell to 3.8% if we take out special dividends.
Here is a break down of the dividends versus the earnings and free cash flow per share.
You can see that the Nov dividends are increasing gradually and not falling back. The Aug gets augmented with special div. Taking it out, a safe estimation is 11 cents.
But an alarming thing is that seeing the free cash flow trend to be drastically falling as the years go buy.
I thought they are making more acquisitions? Are we neglecting higher future cash flows from these acquisitions?
Usually the dividends paid out is less than EPS.
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Kyith worked as an IT operations engineer from 2004 to 2019. Currently, he works as a Senior Solutions Specialist in Insurance Start-up Havend. All opinions on Investment Moats are his own and does not represent the views of Providend.
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James
Wednesday 2nd of January 2013
Every ICT, I think of the $6/meal paid by SAF to SATs (SFI)... lol
Royston
Tuesday 1st of January 2013
For me, I would be looking at a 5% yield. i.e. Price of about $2.20-$2.40.
Drizzt
Tuesday 1st of January 2013
hi Roy, how much yield would you look into to compensate for this investment?
Royston
Tuesday 1st of January 2013
I also think that SATs is a stable dividend counter worth looking into. Will definitely keep a lookout if there's any meaningful correction in the price. :)