Fibon Berhad's (KLSE:FIBON) Dividend Is Being Reduced To MYR0.011
Fibon Berhad's (KLSE:FIBON) dividend is being reduced by 12% to MYR0.011 per share on 27th of December, in comparison to last year's comparable payment of MYR0.0125. However, the dividend yield of 2.8% is still a decent boost to shareholder returns.
Check out our latest analysis for Fibon Berhad
Fibon Berhad's Projected Earnings Seem Likely To Cover Future Distributions
We like to see robust dividend yields, but that doesn't matter if the payment isn't sustainable. However, prior to this announcement, Fibon Berhad's dividend was comfortably covered by both cash flow and earnings. As a result, a large proportion of what it earned was being reinvested back into the business.
Over the next year, EPS could expand by 9.9% if recent trends continue. If the dividend continues on this path, the payout ratio could be 21% by next year, which we think can be pretty sustainable going forward.
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 annual payment back then was MYR0.011, compared to the most recent full-year payment of MYR0.0125. This means that it has been growing its distributions at 1.3% per annum over that time. We're glad to see the dividend has risen, but with a limited rate of growth and fluctuations in the payments the total shareholder return may be limited.
Fibon Berhad Could Grow Its Dividend
With a relatively unstable dividend, it's even more important to see if earnings per share is growing. We are encouraged to see that Fibon Berhad has grown earnings per share at 9.9% per year over the past five years. A low payout ratio and decent growth suggests that the company is reinvesting well, and it also has plenty of room to increase the dividend over time.
We Really Like Fibon Berhad's Dividend
Overall, we think that Fibon Berhad could be a great option for a dividend investment, although we would have preferred if the dividend wasn't cut this year. By reducing the dividend, pressure will be taken off the balance sheet, which could help the dividend to be consistent in the future. All of these factors considered, we think this has solid potential as a dividend stock.
Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. As an example, we've identified 4 warning signs for Fibon Berhad that you should be aware of before investing. Is Fibon Berhad not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.
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