LBS Bina Group Berhad (KLSE:LBS) Has Announced A Dividend Of MYR0.012

LBS Bina Group Berhad (KLSE:LBS) will pay a dividend of MYR0.012 on the 17th of July. Based on this payment, the dividend yield will be 4.7%, which is fairly typical for the industry.

See our latest analysis for LBS Bina Group Berhad

LBS Bina Group Berhad's Payment Has Solid Earnings Coverage

We like a dividend to be consistent over the long term, so checking whether it is sustainable is important. However, LBS Bina Group Berhad's earnings easily cover the dividend. As a result, a large proportion of what it earned was being reinvested back into the business.

The next year is set to see EPS grow by 22.6%. If the dividend continues on this path, the payout ratio could be 25% by next year, which we think can be pretty sustainable going forward.

Dividend Volatility

The company has a long dividend track record, but it doesn't look great with cuts in the past. The annual payment during the last 10 years was MYR0.0114 in 2013, and the most recent fiscal year payment was MYR0.02. This works out to be a compound annual growth rate (CAGR) of approximately 5.8% a year over that time. A reasonable rate of dividend growth is good to see, but we're wary that the dividend history is not as solid as we'd like, having been cut at least once.

Dividend Growth May Be Hard To Achieve

Growing earnings per share could be a mitigating factor when considering the past fluctuations in the dividend. Unfortunately, LBS Bina Group Berhad's earnings per share has been essentially flat over the past five years, which means the dividend may not be increased each year.

Our Thoughts On LBS Bina Group Berhad's Dividend

In summary, while it's good to see that the dividend hasn't been cut, we are a bit cautious about LBS Bina Group 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 be a touch cautious of relying on this stock primarily for the dividend income.

It's important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. As an example, we've identified 2 warning signs for LBS Bina Group Berhad that you should be aware of before investing. Is LBS Bina Group Berhad not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

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