Negri Sembilan Oil Palms Berhad (KLSE:NSOP) Is Increasing Its Dividend To MYR0.18

Negri Sembilan Oil Palms Berhad's (KLSE:NSOP) dividend will be increasing from last year's payment of the same period to MYR0.18 on 30th of December. This will take the dividend yield to an attractive 4.4%, providing a nice boost to shareholder returns.

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

Impressive dividend yields are good, but this doesn't matter much if the payments can't be sustained. However, Negri Sembilan Oil Palms Berhad's earnings easily cover the dividend. As a result, a large proportion of what it earned was being reinvested back into the business.

If the trend of the last few years continues, EPS will grow by 77.4% over the next 12 months. Assuming the dividend continues along recent trends, we think the payout ratio could be 20% by next year, which is in a pretty sustainable range.

Check out 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. The dividend has gone from an annual total of MYR0.09 in 2015 to the most recent total annual payment of MYR0.26. This means that it has been growing its distributions at 11% per annum over that time. Despite the rapid growth in the dividend over the past number of years, we have seen the payments go down the past as well, so that makes us cautious.

The Dividend Looks Likely To Grow

Growing earnings per share could be a mitigating factor when considering the past fluctuations in the dividend. It's encouraging to see that Negri Sembilan Oil Palms Berhad has been growing its earnings per share at 77% 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.

We Really Like Negri Sembilan Oil Palms Berhad's Dividend

In summary, it is always positive to see the dividend being increased, and we are particularly pleased with its overall sustainability. Earnings are easily covering distributions, and the company is generating plenty of cash. All of these factors considered, we think this has solid potential as a dividend 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 instance, we've picked out 1 warning sign for Negri Sembilan Oil Palms Berhad that investors should take into consideration. 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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