Yahoo Finance Amway (Malaysia) Holdings Berhad (KLSE:AMWAY) Looks Interesting, And It's About To Pay A Dividend
Regular readers will know that we love our dividends at Simply Wall St, which is why it's exciting to see Amway (Malaysia) Holdings Berhad (KLSE:AMWAY) is about to trade ex-dividend in the next 3 days. The ex-dividend date occurs one day before the record date which is the day on which shareholders need to be on the company's books in order to receive a dividend. It is important to be aware of the ex-dividend date because any trade on the stock needs to have been settled on or before the record date. Thus, you can purchase Amway (Malaysia) Holdings Berhad's shares before the 7th of June in order to receive the dividend, which the company will pay on the 21st of June.
The company's next dividend payment will be RM00.05 per share. Last year, in total, the company distributed RM0.60 to shareholders. Last year's total dividend payments show that Amway (Malaysia) Holdings Berhad has a trailing yield of 8.1% on the current share price of RM07.40. If you buy this business for its dividend, you should have an idea of whether Amway (Malaysia) Holdings Berhad's dividend is reliable and sustainable. So we need to investigate whether Amway (Malaysia) Holdings Berhad can afford its dividend, and if the dividend could grow.
View our latest analysis for Amway (Malaysia) Holdings Berhad
If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. Amway (Malaysia) Holdings Berhad paid out a comfortable 25% of its profit last year. Yet cash flows are even more important than profits for assessing a dividend, so we need to see if the company generated enough cash to pay its distribution. It distributed 40% of its free cash flow as dividends, a comfortable payout level for most companies.
It's encouraging to see that the dividend is covered by both profit and cash flow. This generally suggests the dividend is sustainable, as long as earnings don't drop precipitously.
Click here to see the company's payout ratio, plus analyst estimates of its future dividends.
Have Earnings And Dividends Been Growing?
Businesses with strong growth prospects usually make the best dividend payers, because it's easier to grow dividends when earnings per share are improving. If earnings fall far enough, the company could be forced to cut its dividend. Fortunately for readers, Amway (Malaysia) Holdings Berhad's earnings per share have been growing at 19% a year for the past five years. Earnings per share are growing rapidly and the company is keeping more than half of its earnings within the business; an attractive combination which could suggest the company is focused on reinvesting to grow earnings further. This will make it easier to fund future growth efforts and we think this is an attractive combination - plus the dividend can always be increased later.
Many investors will assess a company's dividend performance by evaluating how much the dividend payments have changed over time. Amway (Malaysia) Holdings Berhad's dividend payments are effectively flat on where they were 10 years ago.
Final Takeaway
Is Amway (Malaysia) Holdings Berhad an attractive dividend stock, or better left on the shelf? Amway (Malaysia) Holdings Berhad has grown its earnings per share while simultaneously reinvesting in the business. Unfortunately it's cut the dividend at least once in the past 10 years, but the conservative payout ratio makes the current dividend look sustainable. It's a promising combination that should mark this company worthy of closer attention.
While it's tempting to invest in Amway (Malaysia) Holdings Berhad for the dividends alone, you should always be mindful of the risks involved. To that end, you should learn about the 2 warning signs we've spotted with Amway (Malaysia) Holdings Berhad (including 1 which shouldn't be ignored).
If you're in the market for strong dividend payers, we recommend checking our selection of top 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.
