Sungei Bagan Rubber Company (Malaya) Berhad (KLSE:SBAGAN) Has Affirmed Its Dividend Of MYR0.07

The board of Sungei Bagan Rubber Company (Malaya) Berhad (KLSE:SBAGAN) has announced that it will pay a dividend on the 6th of January, with investors receiving MYR0.07 per share. Including this payment, the dividend yield on the stock will be 2.1%, which is a modest boost for shareholders' returns.

Check out our latest analysis for Sungei Bagan Rubber Company (Malaya) Berhad

Sungei Bagan Rubber Company (Malaya) Berhad Might Find It Hard To Continue The Dividend

The dividend yield is a little bit low, but sustainability of the payments is also an important part of evaluating an income stock. Even though Sungei Bagan Rubber Company (Malaya) Berhad isn't generating a profit, it is generating healthy free cash flows that easily cover the dividend. This gives us some comfort about the level of the dividend payments.

Assuming the trend of the last few years continues, EPS will grow by 25.2% over the next 12 months. It's nice to see things moving in the right direction, but this probably won't be enough for the company to turn a profit. However, the positive cash flow ratio gives us some comfort about the sustainability of the dividend.

Sungei Bagan Rubber Company (Malaya) Berhad Has A Solid Track Record

The company has an extended history of paying stable dividends. The dividend has gone from an annual total of MYR0.025 in 2012 to the most recent total annual payment of MYR0.07. This means that it has been growing its distributions at 11% per annum over that time. We can see that payments have shown some very nice upward momentum without faltering, which provides some reassurance that future payments will also be reliable.

The Company Could Face Some Challenges Growing The Dividend

Some investors will be chomping at the bit to buy some of the company's stock based on its dividend history. It's encouraging to see that Sungei Bagan Rubber Company (Malaya) Berhad has been growing its earnings per share at 25% a year over the past five years. While the company hasn't yet recorded a profit, the growth rates are healthy. If the company can turn a profit relatively soon, we can see this becoming a reliable income stock.

In Summary

In summary, while it's good to see that the dividend hasn't been cut, we are a bit cautious about Sungei Bagan Rubber Company (Malaya) Berhad's payments, as there could be some issues with sustaining them into the future. The company has been bring in plenty of cash to cover the dividend, but we don't necessarily think that makes it a great dividend stock. This company is not in the top tier of income providing stocks.

Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. For example, we've picked out 1 warning sign for Sungei Bagan Rubber Company (Malaya) Berhad that investors should know about before committing capital to this stock. Is Sungei Bagan Rubber Company (Malaya) Berhad not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

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