Kerjaya Prospek Group Berhad (KLSE:KERJAYA) Is Increasing Its Dividend To MYR0.07

Kerjaya Prospek Group Berhad (KLSE:KERJAYA) will increase its dividend from last year's comparable payment on the 20th of December to MYR0.07. This makes the dividend yield 4.3%, which is above the industry average.

See our latest analysis for Kerjaya Prospek Group Berhad

Kerjaya Prospek Group Berhad's Future Dividend Projections Appear Well Covered By Earnings

Impressive dividend yields are good, but this doesn't matter much if the payments can't be sustained. Prior to this announcement, Kerjaya Prospek Group Berhad's dividend was making up a very large proportion of earnings and perhaps more concerning was that it was 97% of cash flows. Paying out such a high proportion of cash flows certainly exposes the company to cutting the dividend if cash flows were to reduce.

EPS is set to grow by 61.6% over the next year. If recent patterns in the dividend continues, the payout ratio in 12 months could be 92% which is a bit high but can definitely be sustainable.

Dividend Volatility

The company's dividend history has been marked by instability, with at least one cut in the last 10 years. Since 2014, the annual payment back then was MYR0.0182, compared to the most recent full-year payment of MYR0.10. This works out to be a compound annual growth rate (CAGR) of approximately 19% a year over that time. It is great to see strong growth in the dividend payments, but cuts are concerning as it may indicate the payout policy is too ambitious.

Kerjaya Prospek Group Berhad May Find It Hard To Grow The Dividend

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.

Kerjaya Prospek Group Berhad's Dividend Doesn't Look Sustainable

Overall, this is probably not a great income stock, even though the dividend is being raised at the moment. The track record isn't great, and the payments are a bit high to be considered sustainable. We would be a touch cautious of relying on this stock primarily for the dividend income.

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. As an example, we've identified 1 warning sign for Kerjaya Prospek Group Berhad that you should be aware of before investing. 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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