I  sEE  what  yOu  mEan.

Thanks

http://www.investmentmoats.com/money-management/dividend-investing/yield-watch-telechoice-revisited-dividend-payout-sustainable/

So how are they funding the dividend payment in those years? Judging by the balance sheets, its definitely not by long term debt.

There are 3 years where dividend payout is more than FCF. these are 2006,2007 and currently 2009.

In 2oo6, they fund that by using their 44 mil in cash holdings (see Cash from 44.6 mil to 28.9 mil)

In 2007, observe that there is a build up in current liabilities increase quite substantially (see current liabilities 46 mil to 85 mil)

The puzzling one is in 2009, because both liabilities have decrease and cash have increase. I did some digging and it would seem there is a divestment of a subsidiary perhaps thats why they have additional cash that goes to paying the dividends.

So is dividend sustainable? Hard to say. At current share price of 23.5 cents they always pay out around 9 mil for dividend. Their current cash holdings allow them to pay out for 5 years even if they are not earning money. I feel even if they want to sustain it they can take on some long term debts, but they probably won’t do that.

In these cases, if you are looking for consistent 7% for 5 years, i would say it can definitely take it.

However, what i normally look for in my investments is a sustainable free cashflow greater than the dividend payout. A good example are the telcos in Singapore