Johor Plantations Group Berhad (KLSE:JPG) Is Paying Out A Larger Dividend Than Last Year

The board of Johor Plantations Group Berhad (KLSE:JPG) has announced that it will be paying its dividend of MYR0.03 on the 19th of March, an increased payment from last year's comparable dividend. This makes the dividend yield about the same as the industry average at 2.5%.

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Johor Plantations Group Berhad's Future Dividend Projections Appear Well Covered By Earnings

We like a dividend to be consistent over the long term, so checking whether it is sustainable is important. Prior to this announcement, Johor Plantations Group Berhad's dividend was comfortably covered by both cash flow and earnings. This indicates that quite a large proportion of earnings is being invested back into the business.

Over the next year, EPS is forecast to expand by 3.4%. If the dividend continues on this path, the payout ratio could be by next year, which we think can be pretty sustainable going forward.

View our latest analysis for Johor Plantations Group Berhad

Johor Plantations Group Berhad Doesn't Have A Long Payment History

It is tough to make a judgement on how stable a dividend is when the company hasn't been paying one for very long. This doesn't mean that the company can't pay a good dividend, but just that we want to wait until it can prove itself.

The Dividend Has Limited Growth Potential

Investors who have held shares in the company for the past few years will be happy with the dividend income they have received. However, things aren't all that rosy. Earnings per share has been sinking by 34% over the last five years. This steep decline can indicate that the business is going through a tough time, which could constrain its ability to pay a larger dividend each year in the future. However, the next year is actually looking up, with earnings set to rise. We would just wait until it becomes a pattern before getting too excited.

Our Thoughts On Johor Plantations Group Berhad's Dividend

In summary, while it's always good to see the dividend being raised, we don't think Johor Plantations Group Berhad's payments are rock solid. In the past, the payments have been unstable, but over the short term the dividend could be reliable, with the company generating enough cash to cover it. We don't think Johor Plantations Group Berhad is a great stock to add to your portfolio if income is your focus.

Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. Taking the debate a bit further, we've identified 1 warning sign for Johor Plantations Group Berhad that investors need to be conscious of moving forward. If you are a dividend investor, you might also want to look at our curated list of high yield dividend stocks.

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