Teo Guan Lee Corporation Berhad (KLSE:TGL) Has Affirmed Its Dividend Of MYR0.08

The board of Teo Guan Lee Corporation Berhad (KLSE:TGL) has announced that it will pay a dividend of MYR0.08 per share on the 12th of December. The dividend yield will be 6.2% based on this payment which is still above the industry average.

Check out our latest analysis for Teo Guan Lee Corporation Berhad

Teo Guan Lee Corporation Berhad's Projected Earnings Seem Likely To Cover Future Distributions

If the payments aren't sustainable, a high yield for a few years won't matter that much. Teo Guan Lee Corporation Berhad is quite easily earning enough to cover the dividend, however it is being let down by weak cash flows. With the company not bringing in any cash, paying out to shareholders is bound to become difficult at some point.

Looking forward, earnings per share could rise by 10.5% over the next year if the trend from the last few years continues. 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 MYR0.0375 in 2014 to the most recent total annual payment of MYR0.08. This means that it has been growing its distributions at 7.9% 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.

The Dividend Looks Likely To Grow

Given that the dividend has been cut in the past, we need to check if earnings are growing and if that might lead to stronger dividends in the future. Teo Guan Lee Corporation Berhad has seen EPS rising for the last five years, at 11% per annum. Teo Guan Lee Corporation Berhad definitely has the potential to grow its dividend in the future with earnings on an uptrend and a low payout ratio.

In Summary

Overall, we don't think this company makes a great dividend stock, even though the dividend wasn't cut this year. While Teo Guan Lee Corporation Berhad is earning enough to cover the payments, the cash flows are lacking. We don't think Teo Guan Lee Corporation Berhad is a great stock to add to your portfolio if income is your focus.

Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. For instance, we've picked out 2 warning signs for Teo Guan Lee Corporation Berhad that investors should take into consideration. Is Teo Guan Lee Corporation 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.