Stock Analysis

IJM Corporation Berhad (KLSE:IJM) Will Pay A Dividend Of MYR0.02

KLSE:IJM
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IJM Corporation Berhad (KLSE:IJM) will pay a dividend of MYR0.02 on the 29th of December. This means the annual payment is 4.3% of the current stock price, which is above the average for the industry.

View our latest analysis for IJM Corporation Berhad

IJM Corporation Berhad's Payment Has Solid Earnings Coverage

A big dividend yield for a few years doesn't mean much if it can't be sustained. Prior to this announcement, IJM Corporation Berhad's dividend made up quite a large proportion of earnings but only 38% of free cash flows. This leaves plenty of cash for reinvestment into the business.

The next year is set to see EPS grow by 59.9%. If the dividend continues along recent trends, we estimate the payout ratio will be 58%, which is in the range that makes us comfortable with the sustainability of the dividend.

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KLSE:IJM Historic Dividend December 12th 2023

Dividend Volatility

The company has a long dividend track record, but it doesn't look great with cuts in the past. Since 2013, the dividend has gone from MYR0.065 total annually to MYR0.08. This implies that the company grew its distributions at a yearly rate of about 2.1% over that duration. Modest growth in the dividend is good to see, but we think this is offset by historical cuts to the payments. It is hard to live on a dividend income if the company's earnings are not consistent.

We Could See IJM Corporation Berhad's Dividend Growing

Given that the dividend has been cut in the past, we need to check if earnings are growing and if that might lead to stronger dividends in the future. IJM Corporation Berhad has impressed us by growing EPS at 9.1% per year over the past five years. EPS has been growing at a reasonable rate, although with most of the profits being paid out to shareholders, growth prospects could be more limited in the future.

We Really Like IJM Corporation Berhad's Dividend

Overall, we think that this is a great income investment, and we think that maintaining the dividend this year may have been a conservative choice. Earnings are easily covering distributions, and the company is generating plenty of cash. All of these factors considered, we think this has solid potential as a dividend stock.

Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. As an example, we've identified 1 warning sign for IJM Corporation Berhad that you should be aware of before investing. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.