Riverview Rubber Estates Berhad (KLSE:RVIEW) Is Increasing Its Dividend To RM0.20

Riverview Rubber Estates, Berhad (KLSE:RVIEW) has announced that it will be increasing its dividend on the 4th of February to RM0.20. This will take the dividend yield from 1.9% to 7.5%, providing a nice boost to shareholder returns.

Check out our latest analysis for Riverview Rubber Estates Berhad

Riverview Rubber Estates Berhad's Earnings Easily Cover the Distributions

If the payments aren't sustainable, a high yield for a few years won't matter that much. However, Riverview Rubber Estates Berhad's earnings easily cover the dividend. This means that most of what the business earns is being used to help it grow.

Over the next year, EPS could expand by 32.9% if recent trends continue. If the dividend continues on this path, the payout ratio could be 56% by next year, which we think can be pretty sustainable going forward.

Dividend Volatility

The company has a long dividend track record, but it doesn't look great with cuts in the past. Since 2011, the first annual payment was RM0.18, compared to the most recent full-year payment of RM0.06. Dividend payments have fallen sharply, down 67% over that time. A company that decreases its dividend over time generally isn't what we are looking for.

The Dividend Looks Likely To Grow

Dividends have been going in the wrong direction, so we definitely want to see a different trend in the earnings per share. It's encouraging to see Riverview Rubber Estates Berhad has been growing its earnings per share at 33% a year over the past five years. A low payout ratio gives the company a lot of flexibility, and growing earnings also make it very easy for it to grow the dividend.

Riverview Rubber Estates Berhad Looks Like A Great Dividend Stock

Overall, a dividend increase is always good, and we think that Riverview Rubber Estates Berhad is a strong income stock thanks to its track record and growing earnings. Distributions are quite easily covered by earnings, which are also being converted to cash flows. 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 identified 3 warning signs for Riverview Rubber Estates Berhad (1 is significant!) that you should be aware of before investing. We have also put together a list of global stocks with a solid dividend.

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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.