Kumpulan Perangsang Selangor Berhad (KLSE:KPS) Will Pay A Dividend Of MYR0.01

Kumpulan Perangsang Selangor Berhad's (KLSE:KPS) investors are due to receive a payment of MYR0.01 per share on 23rd of December. This means the annual payment is 6.3% of the current stock price, which is above the average for the industry.

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Kumpulan Perangsang Selangor Berhad's Payment Could Potentially Have Solid Earnings Coverage

Impressive dividend yields are good, but this doesn't matter much if the payments can't be sustained. However, prior to this announcement, Kumpulan Perangsang Selangor Berhad's dividend was comfortably covered by both cash flow and earnings. As a result, a large proportion of what it earned was being reinvested back into the business.

EPS is set to fall by 42.7% over the next 12 months. If the dividend continues along recent trends, we estimate the payout ratio could be 54%, which we consider to be quite comfortable, with most of the company's earnings left over to grow the business in the future.

View our latest analysis for Kumpulan Perangsang Selangor Berhad

Dividend Volatility

The company has a long dividend track record, but it doesn't look great with cuts in the past. Since 2015, the annual payment back then was MYR0.0371, compared to the most recent full-year payment of MYR0.04. Dividend payments have been growing, but very slowly over the period. Modest growth in the dividend is good to see, but we think this is offset by historical cuts to the payments. It is hard to live on a dividend income if the company's earnings are not consistent.

The Dividend Looks Likely To Grow

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 encouraging to see that Kumpulan Perangsang Selangor Berhad has been growing its earnings per share at 16% a year over the past five years. Kumpulan Perangsang Selangor Berhad definitely has the potential to grow its dividend in the future with earnings on an uptrend and a low payout ratio.

Kumpulan Perangsang Selangor Berhad Looks Like A Great Dividend Stock

Overall, we like to see the dividend staying consistent, and we think Kumpulan Perangsang Selangor Berhad might even raise payments in the future. The distributions are easily covered by earnings, and there is plenty of cash being generated as well. If earnings do fall over the next 12 months, the dividend could be buffeted a little bit, but we don't think it should cause too much of a problem in the long term. All in all, this checks a lot of the boxes we look for when choosing an income stock.

Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. Just as an example, we've come across 4 warning signs for Kumpulan Perangsang Selangor Berhad you should be aware of, and 1 of them makes us a bit uncomfortable. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.

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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.