Lysaght Galvanized Steel Berhad (KLSE:LYSAGHT) Is Increasing Its Dividend To MYR0.08

The board of Lysaght Galvanized Steel Berhad (KLSE:LYSAGHT) has announced that it will be paying its dividend of MYR0.08 on the 27th of September, an increased payment from last year's comparable dividend. This takes the dividend yield to 3.8%, which shareholders will be pleased with.

View our latest analysis for Lysaght Galvanized Steel Berhad

Lysaght Galvanized Steel Berhad's Earnings Easily Cover The Distributions

If the payments aren't sustainable, a high yield for a few years won't matter that much. However, Lysaght Galvanized Steel Berhad's earnings easily cover the dividend. As a result, a large proportion of what it earned was being reinvested back into the business.

If the trend of the last few years continues, EPS will grow by 7.8% over the next 12 months. If the dividend continues on this path, the payout ratio could be 34% 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 annual payment during the last 10 years was MYR0.12 in 2014, and the most recent fiscal year payment was MYR0.10. The dividend has shrunk at around 1.8% a year during that period. Declining dividends isn't generally what we look for as they can indicate that the company is running into some challenges.

We Could See Lysaght Galvanized Steel Berhad's Dividend Growing

With a relatively unstable dividend, it's even more important to see if earnings per share is growing. Lysaght Galvanized Steel Berhad has seen EPS rising for the last five years, at 7.8% per annum. A low payout ratio and decent growth suggests that the company is reinvesting well, and it also has plenty of room to increase the dividend over time.

In Summary

In summary, it's great to see that the company can raise the dividend and keep it in a sustainable range. The payout ratio looks good, but unfortunately the company's dividend track record isn't stellar. The dividend looks okay, but there have been some issues in the past, so we would be a little bit cautious.

Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. As an example, we've identified 2 warning signs for Lysaght Galvanized Steel Berhad that you should be aware of before investing. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.

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