Yahoo Finance Heineken Malaysia Berhad (KLSE:HEIM) Is Paying Out A Larger Dividend Than Last Year
Heineken Malaysia Berhad (KLSE:HEIM) has announced that it will be increasing its dividend from last year's comparable payment on the 20th of July to MYR0.98. This takes the dividend yield to 5.1%, which shareholders will be pleased with.
Check out our latest analysis for Heineken Malaysia Berhad
Heineken Malaysia Berhad's Payment Has Solid Earnings Coverage
Impressive dividend yields are good, but this doesn't matter much if the payments can't be sustained. Before making this announcement, the company's dividend was much higher than its earnings. Without profits and cash flows increasing, it would be difficult for the company to continue paying the dividend at this level.
EPS is set to grow by 15.3% over the next year. If recent patterns in the dividend continues, the payout ratio in 12 months could be 88% which is a bit high but can definitely be sustainable.
Dividend Volatility
While the company has been paying a dividend for a long time, it has cut the dividend at least once in the last 10 years. The annual payment during the last 10 years was MYR0.65 in 2013, and the most recent fiscal year payment was MYR1.38. This works out to be a compound annual growth rate (CAGR) of approximately 7.8% a year over that time. It's good to see the dividend growing at a decent rate, but the dividend has been cut at least once in the past. Heineken Malaysia Berhad might have put its house in order since then, but we remain cautious.
Heineken Malaysia Berhad May Have Challenges Growing The Dividend
With a relatively unstable dividend, it's even more important to see if earnings per share is growing. Heineken Malaysia Berhad has impressed us by growing EPS at 8.9% per year over the past five years. While EPS is growing at a decent rate, but future growth could be limited by the amount of earnings being paid out to shareholders.
The Dividend Could Prove To Be Unreliable
Overall, we always like to see the dividend being raised, but we don't think Heineken Malaysia Berhad will make a great income stock. Strong earnings growth means Heineken Malaysia Berhad has the potential to be a good dividend stock in the future, despite the current payments being at elevated levels. We would probably look elsewhere for an income investment.
Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. Taking the debate a bit further, we've identified 2 warning signs for Heineken Malaysia 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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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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