Only Four Days Left To Cash In On AFFIN Bank Berhad's (KLSE:AFFIN) Dividend

Readers hoping to buy AFFIN Bank Berhad (KLSE:AFFIN) for its dividend will need to make their move shortly, as the stock is about to trade ex-dividend. Ex-dividend means that investors that purchase the stock on or after the 22nd of March will not receive this dividend, which will be paid on the 19th of April.

AFFIN Bank Berhad's next dividend payment will be RM0.035 per share. Last year, in total, the company distributed RM0.035 to shareholders. Based on the last year's worth of payments, AFFIN Bank Berhad has a trailing yield of 2.0% on the current stock price of MYR1.78. If you buy this business for its dividend, you should have an idea of whether AFFIN Bank Berhad's dividend is reliable and sustainable. We need to see whether the dividend is covered by earnings and if it's growing.

See our latest analysis for AFFIN Bank Berhad

Dividends are typically paid from company earnings. If a company pays more in dividends than it earned in profit, then the dividend could be unsustainable. That's why it's good to see AFFIN Bank Berhad paying out a modest 31% of its earnings.

When a company paid out less in dividends than it earned in profit, this generally suggests its dividend is affordable. The lower the % of its profit that it pays out, the greater the margin of safety for the dividend if the business enters a downturn.

Click here to see the company's payout ratio, plus analyst estimates of its future dividends.

Have Earnings And Dividends Been Growing?

Companies with falling earnings are riskier for dividend shareholders. If earnings fall far enough, the company could be forced to cut its dividend. Readers will understand then, why we're concerned to see AFFIN Bank Berhad's earnings per share have dropped 11% a year over the past five years. Such a sharp decline casts doubt on the future sustainability of the dividend.

The main way most investors will assess a company's dividend prospects is by checking the historical rate of dividend growth. AFFIN Bank Berhad has seen its dividend decline 16% per annum on average over the past two years, which is not great to see. While it's not great that earnings and dividends per share have fallen in recent years, we're encouraged by the fact that management has trimmed the dividend rather than risk over-committing the company in a risky attempt to maintain yields to shareholders.

To Sum It Up

Has AFFIN Bank Berhad got what it takes to maintain its dividend payments? AFFIN Bank Berhad's earnings per share are down over the past five years, although it has the cushion of a low payout ratio, which would suggest a cut to the dividend is relatively unlikely. We think there are likely better opportunities out there.

With that being said, if dividends aren't your biggest concern with AFFIN Bank Berhad, you should know about the other risks facing this business. For example, we've found 2 warning signs for AFFIN Bank Berhad that we recommend you consider before investing in the business.

If you're in the market for dividend stocks, we recommend checking our list of top dividend stocks with a greater than 2% yield and an upcoming dividend.

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This article by Simply Wall St is general in nature. 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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