TH Plantations Berhad's (KLSE:THPLANT) Shareholders Will Receive A Bigger Dividend Than Last Year

TH Plantations Berhad's (KLSE:THPLANT) periodic dividend will be increasing on the 2nd of May to MYR0.03, with investors receiving 50% more than last year's MYR0.02. This makes the dividend yield about the same as the industry average at 3.4%.

See our latest analysis for TH Plantations Berhad

TH Plantations Berhad's Projected Earnings Seem Likely To Cover Future Distributions

While it is always good to see a solid dividend yield, we should also consider whether the payment is feasible. The last dividend was quite easily covered by TH Plantations Berhad's earnings. This indicates that quite a large proportion of earnings is being invested back into the business.

Looking forward, earnings per share is forecast to rise by 0.5% over the next year. If the dividend continues on this path, the payout ratio could be 33% by next year, which we think can be pretty sustainable going forward.

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. The dividend has gone from an annual total of MYR0.0362 in 2015 to the most recent total annual payment of MYR0.02. The dividend has shrunk at around 5.8% a year during that period. Generally, we don't like to see a dividend that has been declining over time as this can degrade shareholders' returns and indicate that the company may be running into problems.

The Dividend Looks Likely To Grow

Given that the track record hasn't been stellar, we really want to see earnings per share growing over time. TH Plantations Berhad has seen EPS rising for the last five years, at 56% per annum. TH Plantations Berhad is clearly able to grow rapidly while still returning cash to shareholders, positioning it to become a strong dividend payer in the future.

TH Plantations Berhad Looks Like A Great Dividend Stock

Overall, a dividend increase is always good, and we think that TH Plantations 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.

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. Case in point: We've spotted 3 warning signs for TH Plantations Berhad (of which 1 is a bit unpleasant!) you should know about. Is TH Plantations Berhad not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

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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.