Heineken Malaysia Berhad (KLSE:HEIM) Is Due To Pay A Dividend Of MYR0.88
Heineken Malaysia Berhad's (KLSE:HEIM) investors are due to receive a payment of MYR0.88 per share on 25th of July. This means the annual payment is 5.5% of the current stock price, which is above the average for the industry.
View our latest analysis for Heineken Malaysia Berhad
Heineken Malaysia Berhad's Earnings Easily Cover The Distributions
Impressive dividend yields are good, but this doesn't matter much if the payments can't be sustained. Prior to this announcement, the company was paying out 97% of what it was earning. Without profits and cash flows increasing, it would be difficult for the company to continue paying the dividend at this level.
Earnings per share is forecast to rise by 10.9% over the next year. Assuming the dividend continues along recent trends, our estimates say the payout ratio could reach 92% - on the higher side, but we wouldn't necessarily say this is unsustainable.
Dividend Volatility
The company has a long dividend track record, but it doesn't look great with cuts in the past. The dividend has gone from an annual total of MYR0.685 in 2014 to the most recent total annual payment of MYR1.28. This implies that the company grew its distributions at a yearly rate of about 6.5% over that duration. We have seen cuts in the past, so while the growth looks promising we would be a little bit cautious about its track record.
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. It's encouraging to see that Heineken Malaysia Berhad has been growing its earnings per share at 6.9% a year over the past five years. However, the company isn't reinvesting a lot back into the business, so we would expect the growth rate to slow down somewhat in the future.
Heineken Malaysia Berhad's Dividend Doesn't Look Sustainable
Overall, it's not great to see that the dividend has been cut, but this might be explained by the payments being a bit high previously. The track record isn't great, and the payments are a bit high to be considered sustainable. We would probably look elsewhere for an income investment.
Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. For example, we've picked out 2 warning signs for Heineken Malaysia Berhad that investors should know about before committing capital to this stock. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.
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