Yahoo Finance Padini Holdings Berhad's (KLSE:PADINI) Dividend Will Be MYR0.025
Padini Holdings Berhad (KLSE:PADINI) has announced that it will pay a dividend of MYR0.025 per share on the 29th of December. Based on this payment, the dividend yield will be 2.7%, which is fairly typical for the industry.
Check out our latest analysis for Padini Holdings Berhad
Padini Holdings Berhad's Earnings Easily Cover The Distributions
We like to see a healthy dividend yield, but that is only helpful to us if the payment can continue. Based on the last payment, Padini Holdings Berhad was paying only paying out a fraction of earnings, but the payment was a massive 143% of cash flows. The business might be trying to strike a balance between returning cash to shareholders and reinvesting back into the business, but this high of a payout ratio could definitely force the dividend to be cut if the company runs into a bit of a tough spot.
The next year is set to see EPS grow by 6.6%. If the dividend continues on this path, the payout ratio could be 35% by next year, which we think can be pretty sustainable going forward.
Dividend Volatility
The company has a long dividend track record, but it doesn't look great with cuts in the past. The annual payment during the last 10 years was MYR0.06 in 2013, and the most recent fiscal year payment was MYR0.10. This works out to be a compound annual growth rate (CAGR) of approximately 5.2% a year over that time. A reasonable rate of dividend growth is good to see, but we're wary that the dividend history is not as solid as we'd like, having been cut at least once.
The Dividend's Growth Prospects Are Limited
Given that the dividend has been cut in the past, we need to check if earnings are growing and if that might lead to stronger dividends in the future. However, Padini Holdings Berhad has only grown its earnings per share at 4.0% per annum over the past five years. While growth may be thin on the ground, Padini Holdings Berhad could always pay out a higher proportion of earnings to increase shareholder returns.
Our Thoughts On Padini Holdings Berhad's Dividend
Overall, we don't think this company makes a great dividend stock, even though the dividend wasn't cut this year. 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.
It's important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. However, there are other things to consider for investors when analysing stock performance. To that end, Padini Holdings Berhad has 2 warning signs (and 1 which is a bit unpleasant) we think you should know about. 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.
