Hibiscus Petroleum Berhad (KLSE:HIBISCS) Will Pay A Larger Dividend Than Last Year At MYR0.03

Hibiscus Petroleum Berhad (KLSE:HIBISCS) has announced that it will be increasing its dividend from last year's comparable payment on the 22nd of January to MYR0.03. This takes the annual payment to 4.3% of the current stock price, which unfortunately is below what the industry is paying.

View our latest analysis for Hibiscus Petroleum Berhad

Hibiscus Petroleum Berhad's Payment Could Potentially Have Solid Earnings Coverage

If it is predictable over a long period, even low dividend yields can be attractive. However, Hibiscus Petroleum Berhad's earnings easily cover the dividend. As a result, a large proportion of what it earned was being reinvested back into the business.

Over the next year, EPS is forecast to expand by 5.3%. If the dividend continues along recent trends, we estimate the payout ratio will be 21%, which is in the range that makes us comfortable with the sustainability of the dividend.

Hibiscus Petroleum 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. The dividend has gone from an annual total of MYR0.025 in 2020 to the most recent total annual payment of MYR0.085. This means that it has been growing its distributions at 36% per annum over that time. Dividends have grown rapidly over this time, but with cuts in the past we are not certain that this stock will be a reliable source of income in the future.

The Dividend Looks Likely To Grow

Growing earnings per share could be a mitigating factor when considering the past fluctuations in the dividend. Hibiscus Petroleum Berhad has seen EPS rising for the last five years, at 17% per annum. With a decent amount of growth and a low payout ratio, we think this bodes well for Hibiscus Petroleum Berhad's prospects of growing its dividend payments in the future.

Hibiscus Petroleum Berhad Looks Like A Great Dividend Stock

Overall, a dividend increase is always good, and we think that Hibiscus Petroleum Berhad is a strong income stock thanks to its track record and growing earnings. The company is easily earning enough to cover its dividend payments and it is great to see that these earnings are being translated into cash flow. All in all, this checks a lot of the boxes we look for when choosing an income stock.

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 1 warning sign for Hibiscus Petroleum Berhad that investors should take into consideration. 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.