Suria Capital Holdings Berhad (KLSE:SURIA) will pay a dividend of MYR0.025 on the 28th of July. This payment means that the dividend yield will be 3.1%, which is around the industry average.
Check out our latest analysis for Suria Capital Holdings Berhad
Suria Capital Holdings Berhad's Dividend Is Well Covered By Earnings
We aren't too impressed by dividend yields unless they can be sustained over time. Before making this announcement, Suria Capital Holdings Berhad was easily earning enough to cover the dividend. As a result, a large proportion of what it earned was being reinvested back into the business.
Looking forward, earnings per share is forecast to fall by 14.6% over the next year. If the dividend continues along the path it has been on recently, we estimate the payout ratio could be 25%, which is comfortable for the company to continue in the future.
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 MYR0.0525 in 2013 to the most recent total annual payment of MYR0.04. The dividend has shrunk at around 2.7% a year during that period. Declining dividends isn't generally what we look for as they can indicate that the company is running into some challenges.
The Dividend's Growth Prospects Are Limited
With a relatively unstable dividend, it's even more important to evaluate if earnings per share is growing, which could point to a growing dividend in the future. Earnings per share has been crawling upwards at 4.0% per year. While growth may be thin on the ground, Suria Capital Holdings Berhad could always pay out a higher proportion of earnings to increase shareholder returns.
Our Thoughts On Suria Capital Holdings Berhad's Dividend
Overall, a consistent dividend is a good thing, and we think that Suria Capital Holdings Berhad has the ability to continue this into the future. 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.
It's important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. To that end, Suria Capital Holdings Berhad has 3 warning signs (and 1 which makes us a bit uncomfortable) we think you should know about. If you are a dividend investor, you might also want to look at our curated list of high yield dividend stocks.