Leong Hup International Berhad (KLSE:LHI) Is Due To Pay A Dividend Of MYR0.013

Leong Hup International Berhad (KLSE:LHI) will pay a dividend of MYR0.013 on the 27th of May. The dividend yield will be 4.2% based on this payment which is still above the industry average.

Check out our latest analysis for Leong Hup International Berhad

Leong Hup International Berhad's Payment Has Solid Earnings Coverage

If the payments aren't sustainable, a high yield for a few years won't matter that much. Before making this announcement, Leong Hup International Berhad was easily earning enough to cover the dividend. As a result, a large proportion of what it earned was being reinvested back into the business.

The next year is set to see EPS grow by 1.6%. If the dividend continues on this path, the payout ratio could be 5.0% by next year, which we think can be pretty sustainable going forward.

Leong Hup International Berhad's Dividend Has Lacked Consistency

Leong Hup International Berhad has been paying dividends for a while, but the track record isn't stellar. Due to this, we are a little bit cautious about the dividend consistency over a full economic cycle. The dividend has gone from an annual total of MYR0.016 in 2019 to the most recent total annual payment of MYR0.024. This implies that the company grew its distributions at a yearly rate of about 8.4% over that duration. A reasonable rate of dividend growth is good to see, but we're wary that the dividend history is not as solid as we'd like, having been cut at least once.

The Dividend Has Growth Potential

Growing earnings per share could be a mitigating factor when considering the past fluctuations in the dividend. Leong Hup International Berhad has seen EPS rising for the last five years, at 8.6% per annum. Leong Hup International Berhad definitely has the potential to grow its dividend in the future with earnings on an uptrend and a low payout ratio.

Leong Hup International 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 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. Taking this all into consideration, this looks like it could be a good dividend opportunity.

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. As an example, we've identified 2 warning signs for Leong Hup International Berhad that you should be aware of before investing. Is Leong Hup International 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.