These stable dividend stocks are currently giving 5.5% or above just for dividend returns.
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Kicking things off – we have Power Root – At the current price, Dividend yield for the past 12 months at a respectable 5.5%
Power Root, the maker of everyone’s favorite herbal remedies, no matter what ails you!
Power Root doesn’t just make drinks; they crafts liquid motivation.
If tiredness is a villain, these guys are the superheroes armed with cans of energy blasts.
For the past 1 years, its stocks price is stable at around 2-ish ringgit range except for recent dip
Now, how likely, is this dividend payout can be sustained or even higher going forward?
For that, we look at % Net Profit Margin by dividing Net Profit with Revenue – in this case – 59.4/455.7 mil = 13%, good profit margin !
Also, we want to analyze Net Profit Growth. Looks like it has grown 125%, 26.3 mil to 59.4 mil woohoo, talk about can’t stop, won’t stop!
Then next, we want to look at this stocks dividend risks to you if any
Whether it has too much debt that can make it vulnerable to sudden negative changes in business and economic conditions
For this, we look at Net Debt = Borrowings – (Fixed Deposits + Cash Balances), Ideally, ZERO or Negative.
for Power Root, it has short term borrowings of 170 mil against cash & bank balances of 52 mil
gearing = (total debt – cash) divided by shareholders funds
For Power Root, its gearing hovers around 10%, nothing to worry about
RCE Capital – At the current price, Dividend yield for the past 12 months stands tall at 13%! + %
Disregarding special dividend, its dividend yield is still at a mouth-watering 6.8%
RCE Capital sounds about as exciting as watching grass grow or paint dry. Consumer lending? Payroll collection? Commercial financing? Sounds drier than month-old toast, doesn’t it?
But somehow, these master money lenders have the magic touch for making profits materialize even more often than the free appetizers their hungry shareholders love. Their secret sauce? A pinch of consumer financing here, a dash of commercial lending there, and voila—their bland biz pot is transformed into a dividend cash cow!
For the past 1 years, its stocks price has went up 50% from RM 1.60 to close to RM 3
So, how likely, is this high dividend payout can be sustained or even higher going forward?
For that, we look at % Net Margin Past 4 Quarters by dividing 2023 Net Profit with Revenue – in this case – 138 / 323 mil = 43% – outstanding!
Next, we want to look at its Net Profit Growth. Looks like it has grown 4 % compared to the year before, 133 mil to 138mil, its y-o-y net profit growth for the past 5 years has been in the 7 to 15 % range and in fact, far exceeded its Net Profit 32-ish mil, before the pandemic
As usual, we look at a company’s leverage and shows the extent to which operations are funded by lenders versus shareholders. Financial term for this is Gearing Ratio –
high gearing generally implies a company may be vulnerable to sudden negative changes in business and economic conditions.
The gearing ratio measures a company’s debt burden. When a company takes on loans to buy more assets that generate juicy returns, that can ramp up profits fast & furious during good times, tends to crash hardest though when the economy hits a pothole.
gearing = (total debt – cash) divided by shareholders funds
For RCE Capital its gearing has always been sky-high at 100 to 200%.
It says the practice of keeping minimal cash & bank balance has always been intentional in its nature of business, so if you are a shareholder, you have to live with it
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Disclaimer – This is not investment advice & does not constitute a recommendation to buy the dividend stocks covered as I don’t know your financial needs, circumstances, risk appetite or investment objectives.
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