Cheap Stocks Worth Exploring
Screening 98 cheap Bursa stocks for dividends that actually last
A Bursa Malaysia screen of every stock priced under RM1 returned 98 names. Only 10 are worth buying.
Cheap shares look like easy income, especially when they carry a fat dividend yield. The catch is that a low price and a high yield say nothing about whether the company can keep paying. Some dividends are funded by the cash the business earns; others are propped up by borrowing or by running down reserves, and those get cut the moment money tightens.
Each stock was scored out of five on profitability, financial backing, valuation, cash-flow and dividend safety, and liquidity. Then every dividend faced one hard test: does free cash flow actually cover it? That test is the whole story.
- 24 of 98 stocks scored 3 or better, and only 4 were perfect.
- 23 names pay a dividend, but 6 are value traps where cash does not cover the payout.
- DXN pays 7.1% on coverage of 0.30. DSS pays 3.7% on coverage of 0.11.
- The four cleanest buys, MITRA, LHI, THPLANT and OKA, each score 5 of 5 with covered dividends.
The final split was 10 BUY, 12 WAIT, 76 FORGET. Several of the traps would pass an ordinary price-and-earnings screen, which is exactly why the cash-cover test sits at the center of the method rather than at the end.
Yield is a promise; coverage is the proof. A high yield with thin cash behind it is not a bargain, it is a dividend cut waiting to happen.
For an income investor on a small budget, the discipline is simple: screen for quality, then refuse any dividend that free cash flow cannot cover.