Assessing the Sustainability of KLKBY's Dividend Payments
Kuala Lumpur Kepong Bhd (KLKBY, Financial) recently announced a dividend of $0.09 per share, payable on 2024-03-13, with the ex-dividend date set for 2024-01-30. As investors look forward to this upcoming payment, the spotlight also shines on the company's dividend history, yield, and growth rates. Using the data from GuruFocus, let's look into Kuala Lumpur Kepong Bhd's dividend performance and assess its sustainability.
What Does Kuala Lumpur Kepong Bhd Do?
Kuala Lumpur Kepong Bhd harvests oil palm and rubber plantations in Southeast Asia. On top of utilizing the plantations, the company manufactures fatty acids and alcohols, oleochemicals, soaps, rubber gloves, and other specialty chemicals and is also engaged in the business of property development. Its reportable segments include Plantation, Manufacturing, Property Development, Investment Holding, and Others. The majority of the revenue is generated from its manufacturing segment which is involved in the manufacturing of oleochemicals, non-ionic surfactants and esters, rubber gloves, parquet flooring products, pharmaceutical products, storing and distribution of bulk liquid, refining of palm products, kernel crushing, and trading of palm products.
A Glimpse at Kuala Lumpur Kepong Bhd's Dividend History
Kuala Lumpur Kepong Bhd has maintained a consistent dividend payment record since 2003. Dividends are currently distributed on a bi-annual basis. Below is a chart showing annual Dividends Per Share for tracking historical trends.
Breaking Down Kuala Lumpur Kepong Bhd's Dividend Yield and Growth
As of today, Kuala Lumpur Kepong Bhd currently has a 12-month trailing dividend yield of 4.31% and a 12-month forward dividend yield of 2.53%. This suggests an expectation of decreased dividend payments over the next 12 months.
Over the past three years, Kuala Lumpur Kepong Bhd's annual dividend growth rate was 26.00%. Extended to a five-year horizon, this rate decreased to 18.60% per year. And over the past decade, Kuala Lumpur Kepong Bhd's annual dividends per share growth rate stands at 4.70%.
Based on Kuala Lumpur Kepong Bhd's dividend yield and five-year growth rate, the 5-year yield on cost of Kuala Lumpur Kepong Bhd stock as of today is approximately 10.11%.
The Sustainability Question: Payout Ratio and Profitability
To assess the sustainability of the dividend, one needs to evaluate the company's payout ratio. The dividend payout ratio provides insights into the portion of earnings the company distributes as dividends. A lower ratio suggests that the company retains a significant part of its earnings, thereby ensuring the availability of funds for future growth and unexpected downturns. As of 2023-09-30, Kuala Lumpur Kepong Bhd's dividend payout ratio is 1.28, which may suggest that the company's dividend may not be sustainable.
Kuala Lumpur Kepong Bhd's profitability rank, offers an understanding of the company's earnings prowess relative to its peers. GuruFocus ranks Kuala Lumpur Kepong Bhd's profitability 8 out of 10 as of 2023-09-30, suggesting good profitability prospects. The company has reported positive net income for each of the years over the past decade, further solidifying its high profitability.
Growth Metrics: The Future Outlook
To ensure the sustainability of dividends, a company must have robust growth metrics. Kuala Lumpur Kepong Bhd's growth rank of 8 out of 10 suggests that the company's growth trajectory is good relative to its competitors.
Revenue is the lifeblood of any company, and Kuala Lumpur Kepong Bhd's revenue per share, combined with the 3-year revenue growth rate, indicates a strong revenue model. Kuala Lumpur Kepong Bhd's revenue has increased by approximately 14.70% per year on average, a rate that outperforms approximately 72.88% of global competitors.
The company's 3-year EPS growth rate showcases its capability to grow its earnings, a critical component for sustaining dividends in the long run. During the past three years, Kuala Lumpur Kepong Bhd's earnings increased by approximately 4.10% per year on average, a rate that outperforms approximately 45.22% of global competitors.
Lastly, the company's 5-year EBITDA growth rate of 20.70%, which outperforms approximately 77.62% of global competitors, underscores its efficiency in generating earnings before interest, taxes, depreciation, and amortization.
Next Steps
In conclusion, Kuala Lumpur Kepong Bhd's upcoming dividend payment, consistent dividend history, and impressive growth metrics paint a picture of a company with a strong financial foundation. However, the higher payout ratio warrants a closer look to ensure long-term dividend sustainability. Investors should balance these factors with the company's solid profitability and growth prospects when considering KLKBY as a potential addition to their portfolios. Value investors, in particular, may find Kuala Lumpur Kepong Bhd's balance of dividend payments and growth potential to be an attractive proposition. GuruFocus Premium users can screen for high-dividend yield stocks using the High Dividend Yield Screener to find similar investment opportunities.
This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circumstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein.
