Scientex Berhad (KLSE:SCIENTX) Will Pay A Dividend Of MYR0.06

The board of Scientex Berhad (KLSE:SCIENTX) has announced that it will pay a dividend of MYR0.06 per share on the 23rd of January. Based on this payment, the dividend yield will be 3.4%, which is fairly typical for the industry.

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Scientex Berhad's Payment Could Potentially Have Solid Earnings Coverage

Unless the payments are sustainable, the dividend yield doesn't mean too much. Before making this announcement, Scientex 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 rise by 16.7% over the next year. If the dividend continues on this path, the payout ratio could be 32% by next year, which we think can be pretty sustainable going forward.

Check out our latest analysis for Scientex Berhad

Dividend Volatility

While the company has been paying a dividend for a long time, it has cut the dividend at least once in the last 10 years. The annual payment during the last 10 years was MYR0.0367 in 2015, and the most recent fiscal year payment was MYR0.12. This implies that the company grew its distributions at a yearly rate of about 13% over that duration. 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.

We Could See Scientex Berhad's Dividend Growing

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. Scientex Berhad has seen EPS rising for the last five years, at 6.2% per annum. With a decent amount of growth and a low payout ratio, we think this bodes well for Scientex Berhad's prospects of growing its dividend payments in the future.

Our Thoughts On Scientex Berhad's Dividend

Overall, a consistent dividend is a good thing, and we think that Scientex 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.

Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. For example, we've picked out 2 warning signs for Scientex Berhad that investors should know about before committing capital to this stock. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.

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