Alliance Bank Malaysia Berhad (KLSE:ABMB) Has Announced A Dividend Of MYR0.1085

The board of Alliance Bank Malaysia Berhad (KLSE:ABMB) has announced that it will pay a dividend on the 28th of December, with investors receiving MYR0.1085 per share. The dividend yield of 6.3% is still a nice boost to shareholder returns, despite the cut.

Check out our latest analysis for Alliance Bank Malaysia Berhad

Alliance Bank Malaysia Berhad's Payment Expected To Have Solid Earnings Coverage

We like to see robust dividend yields, but that doesn't matter if the payment isn't sustainable.

Having paid out dividends for 6 years, Alliance Bank Malaysia Berhad has a good history of paying out a part of its earnings to shareholders. Past distributions do not necessarily guarantee future ones, but Alliance Bank Malaysia Berhad's payout ratio of 50% is a good sign for current shareholders as this means that earnings decently cover dividends.

Over the next 3 years, EPS is forecast to expand by 19.2%. Analysts forecast the future payout ratio could be 49% over the same time horizon, which is a number we think the company can maintain.

Alliance Bank Malaysia Berhad's Dividend Has Lacked Consistency

Even in its relatively short history, the company has reduced the dividend at least once. This suggests that the dividend might not be the most reliable. The annual payment during the last 6 years was MYR0.17 in 2017, and the most recent fiscal year payment was MYR0.22. This means that it has been growing its distributions at 4.4% per annum over that time. 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.

Alliance Bank Malaysia Berhad May Find It Hard To Grow The Dividend

With a relatively unstable dividend, it's even more important to see if earnings per share is growing. Earnings per share has been crawling upwards at 4.8% per year. The company has been growing at a pretty soft 4.8% per annum, and is paying out quite a lot of its earnings to shareholders. While this isn't necessarily a negative, it definitely signals that dividend growth could be constrained in the future unless earnings start to pick up again.

Our Thoughts On Alliance Bank Malaysia Berhad's Dividend

Overall, while it's not great to see that the dividend has been cut, we think the company is now in a good position to make consistent payments going into the future. The payout ratio looks good, but unfortunately the company's dividend track record isn't stellar. 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. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. For instance, we've picked out 1 warning sign for Alliance Bank Malaysia Berhad that investors should take into consideration. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.