Negri Sembilan Oil Palms Berhad (KLSE:NSOP) Is Due To Pay A Dividend Of MYR0.08

Negri Sembilan Oil Palms Berhad (KLSE:NSOP) has announced that it will pay a dividend of MYR0.08 per share on the 30th of June. This will take the dividend yield to an attractive 4.3%, providing a nice boost to shareholder returns.

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Negri Sembilan Oil Palms Berhad's Payment Could Potentially Have Solid Earnings Coverage

A big dividend yield for a few years doesn't mean much if it can't be sustained. However, prior to this announcement, Negri Sembilan Oil Palms Berhad's dividend was comfortably covered by both cash flow and earnings. As a result, a large proportion of what it earned was being reinvested back into the business.

Over the next year, EPS could expand by 32.7% if recent trends continue. If the dividend continues on this path, the payout ratio could be 27% by next year, which we think can be pretty sustainable going forward.

View our latest analysis for Negri Sembilan Oil Palms Berhad

Dividend Volatility

Although the company has a long dividend history, it has been cut at least once in the last 10 years. Since 2015, the dividend has gone from MYR0.09 total annually to MYR0.20. This works out to be a compound annual growth rate (CAGR) of approximately 8.3% a year over that time. It's good to see the dividend growing at a decent rate, but the dividend has been cut at least once in the past. Negri Sembilan Oil Palms Berhad might have put its house in order since then, but we remain cautious.

The Dividend Looks Likely To Grow

With a relatively unstable dividend, it's even more important to see if earnings per share is growing. It's encouraging to see that Negri Sembilan Oil Palms Berhad has been growing its earnings per share at 33% a year over the past five years. Earnings per share is growing at a solid clip, and the payout ratio is low which we think is an ideal combination in a dividend stock as the company can quite easily raise the dividend in the future.

Negri Sembilan Oil Palms Berhad Looks Like A Great Dividend Stock

In summary, it is always positive to see the dividend being increased, and we are particularly pleased with its overall sustainability. 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. However, there are other things to consider for investors when analysing stock performance. For example, we've picked out 2 warning signs for Negri Sembilan Oil Palms Berhad that investors should know about before committing capital to this stock. Is Negri Sembilan Oil Palms Berhad not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

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