Yahoo Finance Leon Fuat Berhad (KLSE:LEONFB) Is Paying Out A Dividend Of MYR0.015
The board of Leon Fuat Berhad (KLSE:LEONFB) has announced that it will pay a dividend of MYR0.015 per share on the 19th of July. This makes the dividend yield 2.6%, which will augment investor returns quite nicely.
Check out our latest analysis for Leon Fuat Berhad
Leon Fuat Berhad's Earnings Easily Cover The Distributions
A big dividend yield for a few years doesn't mean much if it can't be sustained. Leon Fuat Berhad is quite easily earning enough to cover the dividend, however it is being let down by weak cash flows. In general, we consider cash flow to be more important than earnings, so we would be cautious about relying on the sustainability of this dividend.
If the trend of the last few years continues, EPS will grow by 8.7% over the next 12 months. If the dividend continues along recent trends, we estimate the payout ratio will be 14%, which is in the range that makes us comfortable with the sustainability of the dividend.
Dividend Volatility
The company has a long dividend track record, but it doesn't look great with cuts in the past. Since 2014, the annual payment back then was MYR0.03, compared to the most recent full-year payment of MYR0.015. The dividend has shrunk at around 6.7% a year during that period. Declining dividends isn't generally what we look for as they can indicate that the company is running into some challenges.
Leon Fuat Berhad Could Grow Its Dividend
Dividends have been going in the wrong direction, so we definitely want to see a different trend in the earnings per share. Leon Fuat Berhad has impressed us by growing EPS at 8.7% per year over the past five years. With a decent amount of growth and a low payout ratio, we think this bodes well for Leon Fuat Berhad's prospects of growing its dividend payments in the future.
Our Thoughts On Leon Fuat Berhad's Dividend
In summary, while it's good to see that the dividend hasn't been cut, we are a bit cautious about Leon Fuat Berhad's payments, as there could be some issues with sustaining them into the future. With cash flows lacking, it is difficult to see how the company can sustain a dividend payment. This company is not in the top tier of income providing stocks.
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. Just as an example, we've come across 3 warning signs for Leon Fuat Berhad you should be aware of, and 1 of them is potentially serious. 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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