Teck Guan Perdana Berhad (KLSE:TECGUAN) Will Pay A Smaller Dividend Than Last Year

Teck Guan Perdana Berhad's (KLSE:TECGUAN) dividend is being reduced from last year's payment covering the same period to MYR0.04 on the 12th of August. This means that the annual payment is 2.2% of the current stock price, which is lower than what the rest of the industry is paying.

See our latest analysis for Teck Guan Perdana Berhad

Teck Guan Perdana Berhad's Dividend Is Well Covered By Earnings

It would be nice for the yield to be higher, but we should also check if higher levels of dividend payment would be sustainable. However, Teck Guan Perdana 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 1.3% over the next 12 months. If the dividend continues on this path, the payout ratio could be 18% by next year, which we think can be pretty sustainable going forward.

Teck Guan Perdana Berhad Is Still Building Its Track Record

The company has maintained a consistent dividend for a few years now, but we would like to see a longer track record before relying on it. Since 2022, the dividend has gone from MYR0.03 total annually to MYR0.04. This works out to be a compound annual growth rate (CAGR) of approximately 15% a year over that time. Teck Guan Perdana Berhad has been growing its dividend quite rapidly, which is exciting. However, the short payment history makes us question whether this performance will persist across a full market cycle.

The Dividend's Growth Prospects Are Limited

Investors who have held shares in the company for the past few years will be happy with the dividend income they have received. Unfortunately, Teck Guan Perdana Berhad's earnings per share has been essentially flat over the past five years, which means the dividend may not be increased each year. While growth may be thin on the ground, Teck Guan Perdana Berhad could always pay out a higher proportion of earnings to increase shareholder returns.

Our Thoughts On Teck Guan Perdana Berhad's Dividend

Overall, we think that Teck Guan Perdana Berhad could make a reasonable income stock, even though it did cut the dividend this year. While the payout ratios are a good sign, we are less enthusiastic about the company's dividend record. Taking all of this into consideration, the dividend looks viable moving forward, but investors should be mindful that the company has pushed the boundaries of sustainability in the past and may do so again.

Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. However, there are other things to consider for investors when analysing stock performance. For instance, we've picked out 3 warning signs for Teck Guan Perdana Berhad that investors should take into consideration. If you are a dividend investor, you might also want to look at our curated list of high yield dividend stocks.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com