Kumpulan H & L High-Tech Berhad (KLSE:HIGHTEC) Has Announced That It Will Be Increasing Its Dividend To MYR0.02

The board of Kumpulan H & L High-Tech Berhad (KLSE:HIGHTEC) has announced that it will be paying its dividend of MYR0.02 on the 28th of October, an increased payment from last year's comparable dividend. This will take the dividend yield to an attractive 4.1%, providing a nice boost to shareholder returns.

See our latest analysis for Kumpulan H & L High-Tech Berhad

Kumpulan H & L High-Tech Berhad's Payment Has Solid Earnings Coverage

We like to see robust dividend yields, but that doesn't matter if the payment isn't sustainable. However, prior to this announcement, Kumpulan H & L High-Tech Berhad's dividend was comfortably covered by both cash flow and earnings. This means that most of its earnings are being retained to grow the business.

If the trend of the last few years continues, EPS will grow by 11.1% over the next 12 months. If the dividend continues on this path, the payout ratio could be 33% by next year, which we think can be pretty sustainable going forward.

Dividend Volatility

While the company has been paying a dividend for a long time, it has cut the dividend at least once in the last 10 years. The dividend has gone from an annual total of MYR0.0133 in 2012 to the most recent total annual payment of MYR0.04. This means that it has been growing its distributions at 12% per annum over that time. Kumpulan H & L High-Tech Berhad has grown distributions at a rapid rate despite cutting the dividend at least once in the past. Companies that cut once often cut again, so we would be cautious about buying this stock solely for the dividend income.

The Dividend Looks Likely To Grow

With a relatively unstable dividend, it's even more important to see if earnings per share is growing. Kumpulan H & L High-Tech Berhad has impressed us by growing EPS at 11% per year over the past five years. With a decent amount of growth and a low payout ratio, we think this bodes well for Kumpulan H & L High-Tech Berhad's prospects of growing its dividend payments in the future.

We Really Like Kumpulan H & L High-Tech Berhad's Dividend

In summary, it is always positive to see the dividend being increased, and we are particularly pleased with its overall sustainability. The company is easily earning enough to cover its dividend payments and it is great to see that these earnings are being translated into cash flow. All in all, this checks a lot of the boxes we look for when choosing an income stock.

Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. However, there are other things to consider for investors when analysing stock performance. For instance, we've picked out 4 warning signs for Kumpulan H & L High-Tech Berhad that investors should take into consideration. If you are a dividend investor, you might also want to look at our curated list of high yield dividend stocks.

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