Yahoo Finance Magnum Berhad (KLSE:MAGNUM) Will Pay A Dividend Of MYR0.015
Magnum Berhad (KLSE:MAGNUM) has announced that it will pay a dividend of MYR0.015 per share on the 25th of June. Based on this payment, the dividend yield for the company will be 5.1%, which is fairly typical for the industry.
View our latest analysis for Magnum Berhad
Magnum Berhad's Earnings Easily Cover The Distributions
Unless the payments are sustainable, the dividend yield doesn't mean too much. Based on the last payment, Magnum Berhad was quite comfortably earning enough to cover the dividend. This indicates that a lot of the earnings are being reinvested into the business, with the aim of fueling growth.
The next year is set to see EPS grow by 18.2%. If the dividend continues on this path, the payout ratio could be 50% by next year, which we think can be pretty sustainable going forward.
Dividend Volatility
Although the company has a long dividend history, it has been cut at least once in the last 10 years. Since 2014, the annual payment back then was MYR0.20, compared to the most recent full-year payment of MYR0.06. Dividend payments have fallen sharply, down 70% over that time. Declining dividends isn't generally what we look for as they can indicate that the company is running into some challenges.
Magnum Berhad May Find It Hard To Grow The Dividend
With a relatively unstable dividend, and a poor history of shrinking dividends, it's even more important to see if EPS is growing. Earnings have grown at around 4.0% a year for the past five years, which isn't massive but still better than seeing them shrink. Growth of 4.0% per annum is not particularly high, which might explain why the company is paying out a higher proportion of earnings. This isn't necessarily bad, but we wouldn't expect rapid dividend growth in the future.
Our Thoughts On Magnum Berhad's Dividend
Overall, it's great to see the dividend being raised and that it is still 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.
It's important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. Taking the debate a bit further, we've identified 1 warning sign for Magnum Berhad that investors need to be conscious of moving forward. Is Magnum Berhad not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.
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