Kumpulan Kitacon Berhad (KLSE:KITACON) Is Paying Out A Dividend Of MYR0.01

The board of Kumpulan Kitacon Berhad (KLSE:KITACON) has announced that it will pay a dividend on the 22nd of December, with investors receiving MYR0.01 per share. 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

Impressive dividend yields are good, but this doesn't matter much if the payments can't be sustained. 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.

Over the next year, EPS is forecast to expand by 42.1%. If the dividend continues on this path, the payout ratio could be by next year, which we think can be pretty sustainable going forward.

View our latest analysis for Kumpulan Kitacon Berhad

Kumpulan Kitacon Berhad's Dividend Has Lacked Consistency

Looking back, the dividend has been unstable but with a relatively short history, we think it may be a bit early to draw conclusions about long term dividend sustainability. Since 2022, the annual payment back then was MYR0.04, compared to the most recent full-year payment of MYR0.03. The dividend has shrunk at around 9.1% a year during that period. Declining dividends isn't generally what we look for as they can indicate that the company is running into some challenges.

The Dividend Has Limited Growth Potential

Given that dividend payments have been shrinking like a glacier in a warming world, we need to check if there are some bright spots on the horizon. Kumpulan Kitacon Berhad's earnings per share has shrunk at 44% a year over the past five years. Dividend payments are likely to come under some pressure unless EPS can pull out of the nosedive it is in. It's not all bad news though, as the earnings are predicted to rise over the next 12 months - we would just be a bit cautious until this becomes a long term trend.

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. In the past, the payments have been unstable, but over the short term the dividend could be reliable, with the company generating enough cash to cover it. We would probably look elsewhere for an income investment.

Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. As an example, we've identified 2 warning signs for Kumpulan Kitacon 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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