Kerjaya Prospek Group Berhad (KLSE:KERJAYA) Is Due To Pay A Dividend Of MYR0.025

Kerjaya Prospek Group Berhad (KLSE:KERJAYA) will pay a dividend of MYR0.025 on the 5th of July. The dividend yield will be 4.3% based on this payment which is still above the industry average.

See our latest analysis for Kerjaya Prospek Group Berhad

Kerjaya Prospek Group Berhad's Dividend Is Well Covered By Earnings

If the payments aren't sustainable, a high yield for a few years won't matter that much. At the time of the last dividend payment, Kerjaya Prospek Group Berhad was paying out a very large proportion of what it was earning and 186% of cash flows. Paying out such a high proportion of cash flows can expose the business to needing to cut the dividend if the business runs into some challenges.

Looking forward, earnings per share is forecast to rise by 55.0% over the next year. If the dividend continues on this path, the payout ratio could be 60% by next year, which we think can be pretty sustainable going forward.

Dividend Volatility

The company has a long dividend track record, but it doesn't look great with cuts in the past. The dividend has gone from an annual total of MYR0.0364 in 2014 to the most recent total annual payment of MYR0.08. This implies that the company grew its distributions at a yearly rate of about 8.2% over that duration. We have seen cuts in the past, so while the growth looks promising we would be a little bit cautious about its track record.

Dividend Growth May Be Hard To Achieve

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. Unfortunately, Kerjaya Prospek Group Berhad's earnings per share has been essentially flat over the past five years, which means the dividend may not be increased each year.

The Dividend Could Prove To Be Unreliable

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. With cash flows lacking, it is difficult to see how the company can sustain a dividend payment. We would be a touch cautious of relying on this stock primarily for the dividend income.

Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. However, there are other things to consider for investors when analysing stock performance. As an example, we've identified 1 warning sign for Kerjaya Prospek Group Berhad that you should be aware of before investing. Is Kerjaya Prospek Group Berhad not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

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