Pantech Group Holdings Berhad (KLSE:PANTECH) has announced a dividend of MYR 0.015

Pantech Group Holdings Berhad (KLSE:PANTECH) investors are set to receive a payment of MYR0.015 per share on September 13. The dividend yield will be 5.5% based on this payment, which is still above the industry average.

See our latest analysis for Pantech Group Holdings Berhad

Payment Pantech Group Holdings Berhad has solid earnings coverage

A high dividend yield over several years doesn’t mean much if it can’t be sustained. The last dividend was fairly easily covered by Pantech Group Holdings Berhad’s profits. This means that a large portion of the profits are being retained to grow the company.

Looking ahead, earnings per share are forecast to grow by 2.8% over the next year. If the dividend continues on this path, the payout ratio could reach 50% next year, which we believe could be quite stable going forward.

Dividend volatility

The company’s dividend history has been marked by volatility, with at least one dividend cut in the past 10 years. The annual payout over the past 10 years was MYR0.04 in 2014, while the last payout in the fiscal year was MYR0.06. This means the company has been increasing its distributions at an annual rate of around 4.1% over that period. It is encouraging to see some dividend growth, but the dividend has been cut at least once, and the size of the cut would have eliminated most of the growth anyway, making it less attractive as an income investment.

The dividend will probably increase

With a relatively unstable dividend, it is even more important to check whether earnings per share are growing. It is encouraging to see that Pantech Group Holdings Berhad has been growing its earnings per share by 15% per year over the past five years. With earnings per share growing at an acceptable rate and a sustainable payout policy, we believe the company is well-positioned to grow earnings and dividends in the future.

We really like Pantech Group Holdings Berhad’s dividend

Overall, we would like to see the dividend remain consistent and we think Pantech Group Holdings Berhad could even raise its payout in the future. The profits easily cover the distributions and the company generates plenty of cash. All in all, it ticks many of the boxes we look for when selecting income stocks.

Companies with a stable dividend policy are likely to enjoy greater investor interest than those suffering from a more inconsistent approach. However, investors need to consider other issues when analyzing stock performance. For example, we have selected 1 warning sign for Pantech Group Holdings Berhad that investors should be aware of before investing capital in these stocks. Looking for more high-yield dividend ideas? Try our a set of strong dividend payers.

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