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

Leong Hup International Berhad's (KLSE:LHI) investors are due to receive a payment of MYR0.013 per share on 27th of May. However, the dividend yield of 4.3% is still a decent boost to shareholder returns.

Check out our latest analysis for Leong Hup International Berhad

Leong Hup International Berhad's Payment Has Solid Earnings Coverage

We like to see robust dividend yields, but that doesn't matter if the payment isn't sustainable. However, Leong Hup International Berhad's earnings easily cover the dividend. This means that most of what the business earns is being used to help it grow.

Looking forward, earnings per share is forecast to rise by 1.6% over the next year. If the dividend continues on this path, the payout ratio could be 5.6% by next year, which we think can be pretty sustainable going forward.

Leong Hup International Berhad's Dividend Has Lacked Consistency

Looking back, Leong Hup International Berhad's dividend hasn't been particularly consistent. This makes us cautious about the consistency of the dividend 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 MYR0.025. This works out to be a compound annual growth rate (CAGR) of approximately 9.3% a year over that time. We have seen cuts in the past, so while the growth looks promising we would be a little bit cautious about its track record.

The Dividend Has Growth Potential

Given that the dividend has been cut in the past, we need to check if earnings are growing and if that might lead to stronger dividends in the future. Leong Hup International Berhad has seen EPS rising for the last five years, at 8.6% per annum. A low payout ratio and decent growth suggests that the company is reinvesting well, and it also has plenty of room to increase the dividend over time.

We Really Like Leong Hup International Berhad's Dividend

In general, we don't like to see the dividend being cut, especially when the company has such high potential like Leong Hup International Berhad does. Reducing the amount it is paying as a dividend can protect the company's balance sheet, keeping the dividend sustainable for longer. Taking this all into consideration, this looks like it could be a good dividend opportunity.

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. As an example, we've identified 2 warning signs for Leong Hup International Berhad that you should be aware of before investing. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.