New Hoong Fatt Holdings Berhad (KLSE:NHFATT) Is Due To Pay A Dividend Of MYR0.03

The board of New Hoong Fatt Holdings Berhad (KLSE:NHFATT) has announced that it will pay a dividend on the 22nd of December, with investors receiving MYR0.03 per share. Based on this payment, the dividend yield will be 3.8%, which is fairly typical for the industry.

Check out our latest analysis for New Hoong Fatt Holdings Berhad

New Hoong Fatt Holdings Berhad's Earnings Easily Cover The Distributions

We aren't too impressed by dividend yields unless they can be sustained over time. However, prior to this announcement, New Hoong Fatt Holdings Berhad's dividend was comfortably covered by both cash flow and earnings. This means that most of its earnings are being retained to grow the business.

Looking forward, earnings per share could rise by 19.5% over the next year if the trend from the last few years continues. Assuming the dividend continues along recent trends, we think the payout ratio could be 22% by next year, which is in a pretty sustainable range.

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 MYR0.118 in 2013, and the most recent fiscal year payment was MYR0.13. Its dividends have grown at less than 1% per annum over this time frame. The dividend has seen some fluctuations in the past, so even though the dividend was raised this year, we should remember that it has been cut in the past.

The Dividend Looks Likely To Grow

Growing earnings per share could be a mitigating factor when considering the past fluctuations in the dividend. New Hoong Fatt Holdings Berhad has impressed us by growing EPS at 19% per year over the past five years. Growth in EPS bodes well for the dividend, as does the low payout ratio that the company is currently reporting.

We Really Like New Hoong Fatt Holdings Berhad's Dividend

Overall, we like to see the dividend staying consistent, and we think New Hoong Fatt Holdings Berhad might even raise payments in the future. The company is easily earning enough to cover its dividend payments and it is great to see that these earnings are being translated into cash flow. Taking this all into consideration, this looks like it could be a good dividend opportunity.

Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. 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 New Hoong Fatt Holdings Berhad that investors should know about before committing capital to this stock. Is New Hoong Fatt Holdings Berhad not quite the opportunity you were looking for? Why not check out our selection of top 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.