Scientex Packaging (Ayer Keroh) Berhad (KLSE:SCIPACK) Will Pay A Dividend Of MYR0.025

Scientex Packaging (Ayer Keroh) Berhad (KLSE:SCIPACK) will pay a dividend of MYR0.025 on the 17th of July. This payment means that the dividend yield will be 2.5%, which is around the industry average.

See our latest analysis for Scientex Packaging (Ayer Keroh) Berhad

Scientex Packaging (Ayer Keroh) Berhad's Payment Has Solid Earnings Coverage

While it is always good to see a solid dividend yield, we should also consider whether the payment is feasible. Prior to this announcement, Scientex Packaging (Ayer Keroh) Berhad's dividend was comfortably covered by both cash flow and earnings. This means that a large portion of its earnings are being retained to grow the business.

If the trend of the last few years continues, EPS will grow by 17.2% over the next 12 months. If the dividend continues along recent trends, we estimate the payout ratio will be 57%, which is in the range that makes us comfortable with the sustainability of the dividend.

Dividend Volatility

The company has a long dividend track record, but it doesn't look great with cuts in the past. The dividend has gone from an annual total of MYR0.0521 in 2014 to the most recent total annual payment of MYR0.05. The dividend has shrunk at a rate of less than 1% a year over this period. A company that decreases its dividend over time generally isn't what we are looking for.

The Dividend Looks Likely To Grow

Growing earnings per share could be a mitigating factor when considering the past fluctuations in the dividend. We are encouraged to see that Scientex Packaging (Ayer Keroh) Berhad has grown earnings per share at 17% per year over the past five years. Shareholders are getting plenty of the earnings returned to them, which combined with strong growth makes this quite appealing.

We Really Like Scientex Packaging (Ayer Keroh) Berhad's Dividend

Overall, we like to see the dividend staying consistent, and we think Scientex Packaging (Ayer Keroh) Berhad might even raise payments in the future. Distributions are quite easily covered by earnings, which are also being converted to cash flows. Taking this all into consideration, this looks like it could be a good dividend opportunity.

Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. Just as an example, we've come across 3 warning signs for Scientex Packaging (Ayer Keroh) Berhad you should be aware of, and 1 of them doesn't sit too well with us. Is Scientex Packaging (Ayer Keroh) 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.

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