Kumpulan Kitacon Berhad (KLSE:KITACON) Has Announced A Dividend Of MYR0.01

Kumpulan Kitacon Berhad's (KLSE:KITACON) investors are due to receive a payment of MYR0.01 per share on 10th of October. This makes the dividend yield 4.1%, which will augment investor returns quite nicely.

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Kumpulan Kitacon Berhad's Future Dividend Projections Appear Well Covered By Earnings

We like to see robust dividend yields, but that doesn't matter if the payment isn't sustainable. Before making this announcement, Kumpulan Kitacon Berhad was easily earning enough to cover the dividend. This means that most of what the business earns is being used to help it grow.

The next year is set to see EPS grow by 26.9%. Assuming the dividend continues along recent trends, we think the payout ratio could be by next year, which is in a pretty sustainable range.

View our latest analysis for Kumpulan Kitacon Berhad

Kumpulan Kitacon Berhad's Dividend Has Lacked Consistency

Looking back, the company hasn't been paying the most consistent dividend, but with such a short dividend history it could be too early to draw solid conclusions. Since 2023, the dividend has gone from MYR0.04 total annually to MYR0.03. This works out to a decline of approximately 25% over that time. A company that decreases its dividend over time generally isn't what we are looking for.

Dividend Growth Potential Is Shaky

Given that the track record hasn't been stellar, we really want to see earnings per share growing over time. Over the past five years, it looks as though Kumpulan Kitacon Berhad's EPS has declined at around 44% a year. A sharp decline in earnings per share is not great from from a dividend perspective. Even conservative payout ratios can come under pressure if earnings fall far enough. However, the next year is actually looking up, with earnings set to rise. We would just wait until it becomes a pattern before getting too excited.

In Summary

Overall, it's nice to see a consistent dividend payment, but we think that longer term, the current level of payment might be unsustainable. The payments haven't been particularly stable and we don't see huge growth potential, but with the dividend well covered by cash flows it could prove to be reliable over the short term. We don't think Kumpulan Kitacon Berhad is a great stock to add to your portfolio if income is your focus.

It's important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. 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 2 warning signs for Kumpulan Kitacon 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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