Sports Toto Berhad (KLSE:SPTOTO) Is Paying Out A Dividend Of MYR0.02

The board of Sports Toto Berhad (KLSE:SPTOTO) has announced that it will pay a dividend of MYR0.02 per share on the 16th of January. This makes the dividend yield 5.8%, which will augment investor returns quite nicely.

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Sports Toto Berhad's Payment Could Potentially Have Solid Earnings Coverage

If the payments aren't sustainable, a high yield for a few years won't matter that much. The last dividend was quite easily covered by Sports Toto Berhad's earnings. This indicates that a lot of the earnings are being reinvested into the business, with the aim of fueling growth.

Over the next year, EPS is forecast to fall by 0.01%. If the dividend continues along recent trends, we estimate the payout ratio could be 44%, which we consider to be quite comfortable, with most of the company's earnings left over to grow the business in the future.

See our latest analysis for Sports Toto Berhad

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. The annual payment during the last 10 years was MYR0.215 in 2015, and the most recent fiscal year payment was MYR0.08. The dividend has shrunk at around 9.4% a year during that period. A company that decreases its dividend over time generally isn't what we are looking for.

The Dividend Looks Likely To Grow

With a relatively unstable dividend, and a poor history of shrinking dividends, it's even more important to see if EPS is growing. We are encouraged to see that Sports Toto Berhad has grown earnings per share at 10% per year over the past five years. Earnings are on the uptrend, and it is only paying a small portion of those earnings to shareholders.

Sports Toto Berhad Looks Like A Great Dividend Stock

Overall, we think that this is a great income investment, and we think that maintaining the dividend this year may have been a conservative choice. The distributions are easily covered by earnings, and there is plenty of cash being generated as well. However, it is worth noting that the earnings are expected to fall over the next year, which may not change the long term outlook, but could affect the dividend payment in the next 12 months. All in all, this checks a lot of the boxes we look for when choosing an income stock.

Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. To that end, Sports Toto Berhad has 2 warning signs (and 1 which is a bit concerning) we think you should know about. Is Sports Toto Berhad not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

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