HPP Holdings Berhad (KLSE:HPPHB) Has Announced A Dividend Of MYR0.0075

The board of HPP Holdings Berhad (KLSE:HPPHB) has announced that it will pay a dividend on the 30th of November, with investors receiving MYR0.0075 per share. This makes the dividend yield 3.9%, which will augment investor returns quite nicely.

View our latest analysis for HPP Holdings Berhad

HPP Holdings Berhad's Earnings Easily Cover The Distributions

Impressive dividend yields are good, but this doesn't matter much if the payments can't be sustained. The last dividend was quite easily covered by HPP Holdings Berhad's earnings. This indicates that quite a large proportion of earnings is being invested back into the business.

The next year is set to see EPS grow by 92.0%. Assuming the dividend continues along recent trends, we think the payout ratio could be 31% by next year, which is in a pretty sustainable range.

HPP Holdings Berhad's Dividend Has Lacked Consistency

Even in its short history, we have seen the dividend cut. Since 2021, the dividend has gone from MYR0.02 total annually to MYR0.015. The dividend has fallen 25% over 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.

Dividend Growth May Be Hard To Come By

Given that the track record hasn't been stellar, we really want to see earnings per share growing over time. It's not great to see that HPP Holdings Berhad's earnings per share has fallen at approximately 9.0% per year over the past five years. If the company is making less over time, it naturally follows that it will also have to pay out less in dividends. Earnings are forecast to grow over the next 12 months and if that happens we could still be a little bit cautious until it becomes a pattern.

Our Thoughts On HPP Holdings Berhad's Dividend

In summary, while it's good to see that the dividend hasn't been cut, we are a bit cautious about HPP Holdings Berhad's payments, as there could be some issues with sustaining them into the future. In the past, the payments have been unstable, but over the short term the dividend could be reliable, with the company generating enough cash to cover it. We would probably look elsewhere for an income investment.

Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. For example, we've picked out 3 warning signs for HPP Holdings Berhad that investors should know about before committing capital to this stock. Is HPP Holdings Berhad not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

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