Sarawak Oil Palms Berhad (KLSE:SOP) Is Paying Out A Dividend Of MYR0.08

Sarawak Oil Palms Berhad (KLSE:SOP) has announced that it will pay a dividend of MYR0.08 per share on the 29th of December. Including this payment, the dividend yield on the stock will be 2.0%, which is a modest boost for shareholders' returns.

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Sarawak Oil Palms Berhad's Future Dividend Projections Appear Well Covered By Earnings

While yield is important, another factor to consider about a company's dividend is whether the current payout levels are feasible. Before making this announcement, Sarawak Oil Palms Berhad was easily earning enough to cover the dividend. This means that most of what the business earns is being used to help it grow.

The next year is set to see EPS grow by 1.6%. If the dividend continues along recent trends, we estimate the payout ratio will be 35%, which is in the range that makes us comfortable with the sustainability of the dividend.

View our latest analysis for Sarawak Oil Palms Berhad

Dividend Volatility

While the company has been paying a dividend for a long time, it has cut the dividend at least once in the last 10 years. Since 2015, the annual payment back then was MYR0.0333, compared to the most recent full-year payment of MYR0.08. This works out to be a compound annual growth rate (CAGR) of approximately 9.2% a year over that time. We like to see dividends have grown at a reasonable rate, but with at least one substantial cut in the payments, we're not certain this dividend stock would be ideal for someone intending to live on the income.

The Dividend Looks Likely To Grow

Growing earnings per share could be a mitigating factor when considering the past fluctuations in the dividend. We are encouraged to see that Sarawak Oil Palms Berhad has grown earnings per share at 13% per year over the past five years. Sarawak Oil Palms Berhad definitely has the potential to grow its dividend in the future with earnings on an uptrend and a low payout ratio.

We Really Like Sarawak Oil Palms Berhad's Dividend

Overall, we like to see the dividend staying consistent, and we think Sarawak Oil Palms Berhad might even raise payments in the future. Distributions are quite easily covered by earnings, which are also being converted to cash flows. Taking this all into consideration, this looks like it could be a good dividend opportunity.

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. For example, we've picked out 1 warning sign for Sarawak Oil Palms Berhad that investors should know about before committing capital to this stock. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.

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