Kumpulan H & L High-Tech Berhad's (KLSE:HIGHTEC) Dividend Will Be MYR0.01

The board of Kumpulan H & L High-Tech Berhad (KLSE:HIGHTEC) has announced that it will pay a dividend on the 10th of March, with investors receiving MYR0.01 per share. Based on this payment, the dividend yield will be 2.9%, which is fairly typical for the industry.

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

Kumpulan H & L High-Tech Berhad's Earnings Easily Cover The Distributions

We aren't too impressed by dividend yields unless they can be sustained over time. Prior to this announcement, Kumpulan H & L High-Tech Berhad's dividend was comfortably covered by both cash flow and earnings. This means that a large portion of its earnings are being retained to grow the business.

Looking forward, earnings per share could rise by 7.7% over the next year if the trend from the last few years continues. If the dividend continues along recent trends, we estimate the payout ratio will be 44%, which is in the range that makes us comfortable with the sustainability of the dividend.

Dividend Volatility

Although the company has a long dividend history, it has been cut at least once in the last 10 years. Since 2013, the dividend has gone from MYR0.0133 total annually to MYR0.03. This implies that the company grew its distributions at a yearly rate of about 8.5% over that duration. We like to see dividends have grown at a reasonable rate, but with at least one substantial cut in the payments, we're not certain this dividend stock would be ideal for someone intending to live on the income.

Kumpulan H & L High-Tech Berhad Could Grow Its Dividend

With a relatively unstable dividend, it's even more important to evaluate if earnings per share is growing, which could point to a growing dividend in the future. We are encouraged to see that Kumpulan H & L High-Tech Berhad has grown earnings per share at 7.7% per year over the past five years. Shareholders are getting plenty of the earnings returned to them, which combined with strong growth makes this quite appealing.

Our Thoughts On Kumpulan H & L High-Tech Berhad's Dividend

Overall, we think Kumpulan H & L High-Tech Berhad is a solid choice as a dividend stock, even though the dividend wasn't raised this year. While the payout ratios are a good sign, we are less enthusiastic about the company's dividend record. The payment isn't stellar, but it could make a decent addition to a dividend portfolio.

Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. Taking the debate a bit further, we've identified 3 warning signs for Kumpulan H & L High-Tech Berhad that investors need to be conscious of moving forward. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.

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