NTPM Holdings Berhad (KLSE:NTPM) Has Affirmed Its Dividend Of RM0.008

December 20, 2021
Source: Shutterstock

The board of NTPM Holdings Berhad (KLSE:NTPM) has announced that it will pay a dividend of RM0.008 per share on the 21st of January. Based on this payment, the dividend yield on the company's stock will be 4.9%, which is an attractive boost to shareholder returns.

View our latest analysis for NTPM Holdings Berhad

NTPM Holdings Berhad's Dividend Is Well Covered By Earnings

We like to see robust dividend yields, but that doesn't matter if the payment isn't sustainable. Based on the last payment, NTPM Holdings Berhad was quite comfortably earning enough to cover the dividend. This indicates that a lot of the earnings are being reinvested into the business, with the aim of fueling growth.

Looking forward, earnings per share is forecast to fall by 27.2% over the next year. Assuming the dividend continues along recent trends, we believe the payout ratio could be 71%, which we are pretty comfortable with and we think is feasible on an earnings basis.

KLSE:NTPM Historic Dividend December 20th 2021

Dividend Volatility

The company has a long dividend track record, but it doesn't look great with cuts in the past. Since 2011, the first annual payment was RM0.029, compared to the most recent full-year payment of RM0.024. Doing the maths, this is a decline of about 1.9% per year. A company that decreases its dividend over time generally isn't what we are looking for.

NTPM Holdings Berhad May Find It Hard To Grow The Dividend

With a relatively unstable dividend, it's even more important to see if earnings per share is growing. However, NTPM Holdings Berhad's EPS was effectively flat over the past five years, which could stop the company from paying more every year. Growth of 0.3% may indicate that the company has limited investment opportunity so it is returning its earnings to shareholders instead. This isn't necessarily bad, but we wouldn't expect rapid dividend growth in the future.

In Summary

In summary, we are pleased with the dividend remaining consistent, and we think there is a good chance of this continuing in the future. While the payout ratios are a good sign, we are less enthusiastic about the company's dividend record. 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.

It's important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. As an example, we've identified 3 warning signs for NTPM Holdings Berhad that you should be aware of before investing. We have also put together a list of global stocks with a solid dividend.

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NTPM Holdings Berhad

NTPM Holdings Berhad, an investment holding company, manufactures and trades in tissue paper and personal care products in Malaysia and internationally.

The Snowflake is a visual investment summary with the score of each axis being calculated by 6 checks in 5 areas.

Analysis AreaScore (0-6)
Future Growth3
Past Performance2
Financial Health2

Read more about these checks in the individual report sections or in our analysis model.

Fair value with moderate growth potential.