Teck Guan Perdana Berhad's (KLSE:TECGUAN) Shareholders Will Receive A Smaller Dividend Than Last Year

Teck Guan Perdana Berhad (KLSE:TECGUAN) is reducing its dividend from last year's comparable payment to MYR0.04 on the 12th of August. This means that the dividend yield is 2.2%, which is a bit low when comparing to other companies in the industry.

Check out our latest analysis for Teck Guan Perdana Berhad

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

The dividend yield is a little bit low, but sustainability of the payments is also an important part of evaluating an income stock. 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.

Over the next year, EPS could expand by 1.3% if recent trends continue. 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

Looking back, the dividend has been stable, but the company hasn't been paying a dividend for very long so we can't be confident that the dividend will remain stable through all economic environments. The annual payment during the last 2 years was MYR0.03 in 2022, and the most recent fiscal year payment was MYR0.04. This implies that the company grew its distributions at a yearly rate of about 15% over that duration. 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.

Teck Guan Perdana Berhad May Find It Hard To Grow The Dividend

Investors who have held shares in the company for the past few years will be happy with the dividend income they have received. However, Teck Guan Perdana Berhad's EPS was effectively flat over the past five years, which could stop the company from paying more every year. Earnings growth is slow, but on the plus side, the dividend payout ratio is low and dividends could grow faster than earnings, if the company decides to increase its payout ratio.

Our Thoughts On Teck Guan Perdana Berhad's Dividend

Overall, while it's not great to see that the dividend has been cut, we think the company is now in a good position to make consistent payments going into the future. The payout ratio looks good, but unfortunately the company's dividend track record isn't stellar. This looks like it could be a good dividend stock going forward, but we would note that the payout ratio has been at higher levels in the past so it could happen 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. Is Teck Guan Perdana Berhad not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

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