Dayang Enterprise Holdings Bhd’s (KLSE:DAYANG) dividend will be increasing from last year’s payment of the same period to MYR0.03 on 22nd of March. This will take the annual payment to 2.6% of the stock price, which is above what most companies in the industry pay.
While the dividend yield is important for income investors, it is also important to consider any large share price moves, as this will generally outweigh any gains from distributions. Investors will be pleased to see that Dayang Enterprise Holdings Bhd’s stock price has increased by 39% in the last 3 months, which is good for shareholders and can also explain a decrease in the dividend yield.
See our latest analysis for Dayang Enterprise Holdings Bhd
Dayang Enterprise Holdings Bhd’s Payment Has Solid Earnings Coverage
We like to see robust dividend yields, but that doesn’t matter if the payment isn’t sustainable. However, prior to this announcement, Dayang Enterprise Holdings Bhd’s dividend was comfortably covered by both cash flow and earnings. This means that most of what the business earns is being used to help it grow.
Over the next year, EPS is forecast to expand by 29.1%. Assuming the dividend continues along recent trends, we think the payout ratio could be 16% by next year, which is in a pretty sustainable range.
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. Since 2014, the dividend has gone from MYR0.0667 total annually to MYR0.06. This works out to be a decline of approximately 1.1% per year over that time. A company that decreases its dividend over time generally isn’t what we are looking for.
Dividend Growth May Be Hard To Achieve
Growing earnings per share could be a mitigating factor when considering the past fluctuations in the dividend. Earnings has been rising at 2.6% per annum over the last five years, which admittedly is a bit slow. While growth may be thin on the ground, Dayang Enterprise Holdings Bhd could always pay out a higher proportion of earnings to increase shareholder returns.
Our Thoughts On Dayang Enterprise Holdings Bhd’s Dividend
In summary, it’s great to see that the company can raise the dividend and keep it in a sustainable range. The dividend has been at reasonable levels historically, but that hasn’t translated into a consistent payment. The payment isn’t stellar, but it could make a decent addition to a dividend portfolio.
Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. As an example, we’ve identified 1 warning sign for Dayang Enterprise Holdings Bhd that you should be aware of before investing. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.
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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.
