BP Plastics Holding Bhd's (KLSE:BPPLAS) Dividend Will Be MYR0.015

BP Plastics Holding Bhd. (KLSE:BPPLAS) has announced that it will pay a dividend of MYR0.015 per share on the 11th of October. This makes the dividend yield 4.7%, which will augment investor returns quite nicely.

See our latest analysis for BP Plastics Holding Bhd

BP Plastics Holding Bhd's Earnings Easily Cover The Distributions

A big dividend yield for a few years doesn't mean much if it can't be sustained. Based on the last payment, BP Plastics Holding Bhd was quite comfortably earning enough to cover the dividend. This indicates that quite a large proportion of earnings is being invested back into the business.

Over the next year, EPS is forecast to expand by 43.7%. If the dividend continues on this path, the payout ratio could be 37% by next year, which we think can be pretty sustainable going forward.

Dividend Volatility

Although the company has a long dividend history, it has been cut at least once in the last 10 years. The annual payment during the last 10 years was MYR0.0267 in 2014, and the most recent fiscal year payment was MYR0.06. This implies that the company grew its distributions at a yearly rate of about 8.4% over that duration. We have seen cuts in the past, so while the growth looks promising we would be a little bit cautious about its track record.

We Could See BP Plastics Holding Bhd's Dividend Growing

With a relatively unstable dividend, it's even more important to see if earnings per share is growing. BP Plastics Holding Bhd has seen EPS rising for the last five years, at 9.7% per annum. Earnings are on the uptrend, and it is only paying a small portion of those earnings to shareholders.

BP Plastics Holding Bhd Looks Like A Great Dividend Stock

Overall, we think that this is a great income investment, and we think that maintaining the dividend this year may have been a conservative choice. Earnings are easily covering distributions, and the company is generating plenty of cash. All of these factors considered, we think this has solid potential as a dividend stock.

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 2 warning signs for BP Plastics Holding Bhd 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.

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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.