Resources Holdings Berhad (KLSE:PTRB) Is Due To Pay A Dividend Of MYR0.0099

The board of PT Resources Holdings Berhad (KLSE:PTRB) has announced that it will pay a dividend on the 11th of November, with investors receiving MYR0.0099 per share. This makes the dividend yield 3.8%, which will augment investor returns quite nicely.

Check out our latest analysis for Resources Holdings Berhad

Resources Holdings Berhad's Projected Earnings Seem Likely To Cover Future Distributions

If the payments aren't sustainable, a high yield for a few years won't matter that much. Prior to this announcement, Resources Holdings Berhad's dividend was only 16% of earnings, however it was paying out 6,004% of free cash flows. While the business may be attempting to set a balanced dividend policy, a cash payout ratio this high might expose the dividend to being cut if the business ran into some challenges.

Looking forward, earnings per share could rise by 21.2% over the next year if the trend from the last few years continues. If the dividend continues along recent trends, we estimate the payout ratio will be 14%, which is in the range that makes us comfortable with the sustainability of the dividend.

Resources Holdings Berhad Is Still Building Its Track Record

Without a track record of dividend payments, we can't make a judgement on how stable it has been. 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.

The Dividend Looks Likely To Grow

Investors who have held shares in the company for the past few years will be happy with the dividend income they have received. Resources Holdings Berhad has seen EPS rising for the last five years, at 21% per annum. Earnings have been growing rapidly, and with a low payout ratio we think that the company could turn out to be a great dividend stock.

In Summary

In summary, while it's good to see that the dividend hasn't been cut, we are a bit cautious about Resources Holdings Berhad's payments, as there could be some issues with sustaining them into the future. While Resources Holdings Berhad is earning enough to cover the payments, the cash flows are lacking. We would probably look elsewhere for an income investment.

Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. However, there are other things to consider for investors when analysing stock performance. To that end, Resources Holdings Berhad has 4 warning signs (and 1 which is a bit concerning) we think you should know about. If you are a dividend investor, you might also want to look at our curated list of high yield dividend stocks.

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