Eupe Corporation Berhad (KLSE:EUPE) Will Pay A Larger Dividend Than Last Year At MYR0.018

Eupe Corporation Berhad (KLSE:EUPE) will increase its dividend on the 14th of December to MYR0.018, which is 20% higher than last year's payment from the same period of MYR0.015. Even though the dividend went up, the yield is still quite low at only 2.3%.

Check out our latest analysis for Eupe Corporation Berhad

Eupe Corporation Berhad's Earnings Easily Cover The Distributions

While yield is important, another factor to consider about a company's dividend is whether the current payout levels are feasible. However, Eupe Corporation Berhad's earnings easily cover the dividend. This means that most of what the business earns is being used to help it grow.

Over the next year, EPS could expand by 20.2% if recent trends continue. If the dividend continues on this path, the payout ratio could be 8.0% by next year, which we think can be pretty sustainable going forward.

Eupe Corporation Berhad's Dividend Has Lacked Consistency

It's comforting to see that Eupe Corporation Berhad has been paying a dividend for a number of years now, however it has been cut at least once in that time. This makes us cautious about the consistency of the dividend over a full economic cycle. Since 2013, the annual payment back then was MYR0.04, compared to the most recent full-year payment of MYR0.018. Doing the maths, this is a decline of about 8.5% per year. Generally, we don't like to see a dividend that has been declining over time as this can degrade shareholders' returns and indicate that the company may be running into problems.

The Dividend Looks Likely To Grow

Given that dividend payments have been shrinking like a glacier in a warming world, we need to check if there are some bright spots on the horizon. Eupe Corporation Berhad has seen EPS rising for the last five years, at 20% per annum. Rapid earnings growth and a low payout ratio suggest this company has been effectively reinvesting in its business. Should that continue, this company could have a bright future.

Eupe Corporation Berhad Looks Like A Great Dividend Stock

Overall, a dividend increase is always good, and we think that Eupe Corporation Berhad is a strong income stock thanks to its track record and growing earnings. 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. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. Taking the debate a bit further, we've identified 2 warning signs for Eupe Corporation Berhad that investors need to be conscious of moving forward. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.

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