Harbour-Link Group Berhad's (KLSE:HARBOUR) Dividend Will Be MYR0.03

Harbour-Link Group Berhad (KLSE:HARBOUR) has announced that it will pay a dividend of MYR0.03 per share on the 27th of December. This payment means that the dividend yield will be 3.9%, which is around the industry average.

See our latest analysis for Harbour-Link Group Berhad

Harbour-Link Group Berhad's Future Dividend Projections Appear Well Covered By Earnings

We aren't too impressed by dividend yields unless they can be sustained over time. Based on the last payment, Harbour-Link Group Berhad was paying only paying out a fraction of earnings, but the payment was a massive 2,074% of cash flows. A cash payout ratio this high could put the dividend under pressure and force the company to reduce it in the future if it were to run into tough times.

If the trend of the last few years continues, EPS will grow by 27.9% over the next 12 months. Assuming the dividend continues along recent trends, we think the payout ratio could be 25% by next year, which is in a pretty sustainable range.

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 MYR0.0114 in 2014 to the most recent total annual payment of MYR0.06. This works out to be a compound annual growth rate (CAGR) of approximately 18% a year over that time. Despite the rapid growth in the dividend over the past number of years, we have seen the payments go down the past as well, so that makes us cautious.

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. We are encouraged to see that Harbour-Link Group Berhad has grown earnings per share at 28% per year over the past five years. Earnings per share is growing at a solid clip, and the payout ratio is low which we think is an ideal combination in a dividend stock as the company can quite easily raise the dividend in the future.

Our Thoughts On Harbour-Link Group Berhad's Dividend

Overall, we don't think this company makes a great dividend stock, even though the dividend wasn't cut this year. While Harbour-Link Group Berhad is earning enough to cover the payments, the cash flows are lacking. This company is not in the top tier of income providing stocks.

Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. As an example, we've identified 2 warning signs for Harbour-Link Group Berhad that you should be aware of before investing. Is Harbour-Link Group Berhad not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

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