Johor Plantations Group Berhad's (KLSE:JPG) Shareholders Will Receive A Bigger Dividend Than Last Year

Johor Plantations Group Berhad (KLSE:JPG) will increase its dividend from last year's comparable payment on the 23rd of December to MYR0.0175. Based on this payment, the dividend yield for the company will be 3.2%, which is fairly typical for the industry.

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Johor Plantations Group Berhad's Future Dividend Projections Appear Well Covered By Earnings

We like a dividend to be consistent over the long term, so checking whether it is sustainable is important. Prior to this announcement, Johor Plantations Group Berhad's dividend was comfortably covered by both cash flow and earnings. This indicates that quite a large proportion of earnings is being invested back into the business.

EPS is set to fall by 4.3% over the next 12 months. If the dividend continues along the path it has been on recently, we estimate the payout ratio could be , which is comfortable for the company to continue in the future.

View our latest analysis for Johor Plantations Group Berhad

Johor Plantations Group Berhad Is Still Building Its Track Record

It's not possible for us to make a backward looking judgement just based on a short payment history. This doesn't mean that the company can't pay a good dividend, but just that we want to wait until it can prove itself.

Dividend Growth Potential Is Shaky

Some investors will be chomping at the bit to buy some of the company's stock based on its dividend history. However, initial appearances might be deceiving. Over the past five years, it looks as though Johor Plantations Group Berhad's EPS has declined at around 34% a year. Such rapid declines definitely have the potential to constrain dividend payments if the trend continues into the future.

Our Thoughts On Johor Plantations Group Berhad's Dividend

Overall, we always like to see the dividend being raised, but we don't think Johor Plantations Group Berhad will make a great income stock. 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 don't think Johor Plantations Group Berhad is a great stock to add to your portfolio if income is your focus.

Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. However, there are other things to consider for investors when analysing stock performance. For instance, we've picked out 1 warning sign for Johor Plantations Group Berhad that investors should take into consideration. Is Johor Plantations Group Berhad not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

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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.