LBS Bina Group Berhad (KLSE:LBS) Is Paying Out A Dividend Of MYR0.012

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

View our latest analysis for LBS Bina Group Berhad

LBS Bina Group Berhad's Earnings Easily Cover The Distributions

While it is always good to see a solid dividend yield, we should also consider whether the payment is feasible. Before making this announcement, LBS Bina Group Berhad was easily earning enough to cover the dividend. This means that most of its earnings are being retained to grow 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's dividend history has been marked by instability, with at least one cut in the last 10 years. Since 2013, the dividend has gone from MYR0.0114 total annually to MYR0.02. This means that it has been growing its distributions at 5.8% per annum 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.

LBS Bina Group Berhad May Find It Hard To Grow The Dividend

Growing earnings per share could be a mitigating factor when considering the past fluctuations in the dividend. LBS Bina Group Berhad hasn't seen much change in its earnings per share over the last five years.

In Summary

Overall, it's nice to see a consistent dividend payment, but we think that longer term, the current level of payment might be unsustainable. The company is generating plenty of cash, which could maintain the dividend for a while, but the track record hasn't been great. We would be a touch cautious of relying on this stock primarily for the dividend income.

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. 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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