LBS Bina Group Berhad (KLSE:LBS) Is Increasing Its Dividend To MYR0.0135

LBS Bina Group Berhad (KLSE:LBS) has announced that it will be increasing its periodic dividend on the 16th of July to MYR0.0135, which will be 13% higher than last year's comparable payment amount of MYR0.012. This makes the dividend yield about the same as the industry average at 3.7%.

Check out our latest analysis for LBS Bina Group Berhad

LBS Bina Group Berhad's Payment Has Solid Earnings Coverage

Unless the payments are sustainable, the dividend yield doesn't mean too much. However, prior to this announcement, LBS Bina Group Berhad's dividend was comfortably covered by both cash flow and earnings. This means that most of its earnings are being retained to grow the business.

Looking forward, earnings per share is forecast to rise by 24.6% over the next year. If the dividend continues on this path, the payout ratio could be 28% 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. Since 2014, the annual payment back then was MYR0.0114, compared to the most recent full-year payment of MYR0.025. This implies that the company grew its distributions at a yearly rate of about 8.2% over that duration. 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.

We Could See LBS Bina Group Berhad's Dividend Growing

Growing earnings per share could be a mitigating factor when considering the past fluctuations in the dividend. LBS Bina Group Berhad has seen EPS rising for the last five years, at 6.8% per annum. Growth in EPS bodes well for the dividend, as does the low payout ratio that the company is currently reporting.

In Summary

Overall, this is a reasonable dividend, and it being raised is an added bonus. The dividend has been at reasonable levels historically, but that hasn't translated into a consistent payment. The dividend looks okay, but there have been some issues in the past, so we would be a little bit cautious.

Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. 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 1 warning sign for LBS Bina Group Berhad that investors should know about before committing capital to this stock. 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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