Homeritz Corporation Berhad (KLSE:HOMERIZ) Is Due To Pay A Dividend Of MYR0.017

Homeritz Corporation Berhad's (KLSE:HOMERIZ) investors are due to receive a payment of MYR0.017 per share on 7th of March. Despite this raise, the dividend yield of 2.7% is only a modest boost to shareholder returns.

View our latest analysis for Homeritz Corporation Berhad

Homeritz Corporation Berhad's Payment Could Potentially Have Solid Earnings Coverage

It would be nice for the yield to be higher, but we should also check if higher levels of dividend payment would be sustainable. However, prior to this announcement, Homeritz Corporation Berhad's dividend was comfortably covered by both cash flow and earnings. This means that most of its earnings are being retained to grow the business.

Over the next year, EPS is forecast to expand by 8.5%. If the dividend continues on this path, the payout ratio could be 62% by next year, which we think can be pretty sustainable going forward.

Dividend Volatility

While the company has been paying a dividend for a long time, it has cut the dividend at least once in the last 10 years. Since 2015, the dividend has gone from MYR0.02 total annually to MYR0.017. Doing the maths, this is a decline of about 1.6% per year. A company that decreases its dividend over time generally isn't what we are looking for.

The Dividend's Growth Prospects Are Limited

With a relatively unstable dividend, it's even more important to see if earnings per share is growing. Earnings has been rising at 2.8% per annum over the last five years, which admittedly is a bit slow. While EPS growth is quite low, Homeritz Corporation Berhad has the option to increase the payout ratio to return more cash to shareholders.

Our Thoughts On Homeritz Corporation Berhad's Dividend

Overall, this is a reasonable dividend, and it being raised is an added bonus. While the payout ratios are a good sign, we are less enthusiastic about the company's dividend record. The dividend looks okay, but there have been some issues in the past, so we would be a little bit cautious.

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. For example, we've picked out 2 warning signs for Homeritz Corporation Berhad that investors should know about before committing capital to this stock. Is Homeritz Corporation Berhad not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

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