Hap Seng Consolidated Berhad (KLSE:HAPSENG) Will Pay A Dividend Of MYR0.10

Hap Seng Consolidated Berhad (KLSE:HAPSENG) has announced that it will pay a dividend of MYR0.10 per share on the 25th of June. This makes the dividend yield 7.2%, which will augment investor returns quite nicely.

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Hap Seng Consolidated Berhad's Future Dividend Projections Appear Well Covered By Earnings

A big dividend yield for a few years doesn't mean much if it can't be sustained. At the time of the last dividend payment, Hap Seng Consolidated Berhad was paying out a very large proportion of what it was earning and 136% of cash flows. Paying out such a high proportion of cash flows certainly exposes the company to cutting the dividend if cash flows were to reduce.

Looking forward, could fall by 12.0% if the company can't turn things around from the last few years. If recent patterns in the dividend continue, we could see the payout ratio reaching 92% in the next 12 months which is on the higher end of the range we would say is sustainable.

Check out our latest analysis for Hap Seng Consolidated Berhad

Dividend Volatility

The company's dividend history has been marked by instability, with at least one cut in the last 10 years. The payments haven't really changed that much since 10 years ago. The dividend has seen some fluctuations in the past, so even though the dividend was raised this year, we should remember that it has been cut in the past.

Dividend Growth Potential Is Shaky

Growing earnings per share could be a mitigating factor when considering the past fluctuations in the dividend. Hap Seng Consolidated Berhad's EPS has fallen by approximately 12% per year during the past five years. This steep decline can indicate that the business is going through a tough time, which could constrain its ability to pay a larger dividend each year in the future.

Hap Seng Consolidated Berhad's Dividend Doesn't Look Sustainable

In summary, while it's good to see that the dividend hasn't been cut, we are a bit cautious about Hap Seng Consolidated Berhad's payments, as there could be some issues with sustaining them into the future. The payments are bit high to be considered sustainable, and the track record isn't the best. We would be a touch cautious of relying on this stock primarily for the dividend income.

It's important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. For example, we've identified 2 warning signs for Hap Seng Consolidated Berhad (1 is significant!) that you should be aware of before investing. Is Hap Seng Consolidated Berhad not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

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