Stock Analysis

Kerjaya Prospek Group Berhad (KLSE:KERJAYA) Has Announced A Dividend Of MYR0.02

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The board of Kerjaya Prospek Group Berhad (KLSE:KERJAYA) has announced that it will pay a dividend of MYR0.02 per share on the 13th of April. This makes the dividend yield 5.1%, which will augment investor returns quite nicely.

View our latest analysis for Kerjaya Prospek Group Berhad

Kerjaya Prospek Group Berhad's Payment Has Solid Earnings Coverage

While it is great to have a strong dividend yield, we should also consider whether the payment is sustainable. Kerjaya Prospek Group Berhad was earning enough to cover the previous dividend, but it was paying out quite a large proportion of its free cash flows. By paying out so much of its cash flows, this could indicate that the company has limited opportunities for investment and growth.

Over the next year, EPS is forecast to expand by 50.5%. Assuming the dividend continues along recent trends, we think the payout ratio could be 51% by next year, which is in a pretty sustainable range.

KLSE:KERJAYA Historic Dividend March 1st 2023

Kerjaya Prospek Group Berhad's Dividend Has Lacked Consistency

Looking back, Kerjaya Prospek Group Berhad's dividend hasn't been particularly consistent. Due to this, we are a little bit cautious about the dividend consistency over a full economic cycle. The dividend has gone from an annual total of MYR0.0364 in 2014 to the most recent total annual payment of MYR0.06. This means that it has been growing its distributions at 5.7% per annum over that time. We have seen cuts in the past, so while the growth looks promising we would be a little bit cautious about its track record.

The Dividend's Growth Prospects Are Limited

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. It's not great to see that Kerjaya Prospek Group Berhad's earnings per share has fallen at approximately 3.0% per year over the past five years. If the company is making less over time, it naturally follows that it will also have to pay out less in dividends. Earnings are predicted to grow over the next year, but we would remain cautious until a track record of earnings growth is established.

Our Thoughts On Kerjaya Prospek Group Berhad's Dividend

In summary, while it's good to see that the dividend hasn't been cut, we are a bit cautious about Kerjaya Prospek Group Berhad's payments, as there could be some issues with sustaining them into the future. While Kerjaya Prospek Group Berhad is earning enough to cover the dividend, we are generally unimpressed with its future prospects. Overall, we don't think this company has the makings of a good income 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. For instance, we've picked out 1 warning sign for Kerjaya Prospek Group 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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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.