AMMB Holdings Berhad (KLSE:AMBANK) Is Due To Pay A Dividend Of MYR0.125

The board of AMMB Holdings Berhad (KLSE:AMBANK) has announced that it will pay a dividend on the 30th of December, with investors receiving MYR0.125 per share. This makes the dividend yield about the same as the industry average at 5.1%.

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AMMB Holdings Berhad's Earnings Will Easily Cover The Distributions

Unless the payments are sustainable, the dividend yield doesn't mean too much.

AMMB Holdings Berhad has a long history of paying out dividends, with its current track record at a minimum of 10 years. Past distributions do not necessarily guarantee future ones, but AMMB Holdings Berhad's payout ratio of 52% is a good sign as this means that earnings decently cover dividends.

Over the next 3 years, EPS is forecast to expand by 10.8%. Analysts estimate the future payout ratio will be 53% over the same time period, which is in the range that makes us comfortable with the sustainability of the dividend.

See our latest analysis for AMMB Holdings Berhad

Dividend Volatility

While the company has been paying a dividend for a long time, it has cut the dividend at least once in the last 10 years. The annual payment during the last 10 years was MYR0.273 in 2015, and the most recent fiscal year payment was MYR0.302. This means that it has been growing its distributions at 1.0% per annum over that time. It's encouraging to see some dividend growth, but the dividend has been cut at least once, and the size of the cut would eliminate most of the growth anyway, which makes this less attractive as an income investment.

AMMB Holdings Berhad Could Grow Its Dividend

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. AMMB Holdings Berhad has seen EPS rising for the last five years, at 8.6% per annum. Earnings are on the uptrend, and it is only paying a small portion of those earnings to shareholders.

We Really Like AMMB Holdings Berhad's Dividend

Overall, we think this could be an attractive income stock, and it is only getting better by paying a higher dividend this year. Distributions are quite easily covered by earnings, which are also being converted to cash flows. All in all, this checks a lot of the boxes we look for when choosing an income stock.

Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. Taking the debate a bit further, we've identified 1 warning sign for AMMB Holdings Berhad that investors need to be conscious of moving forward. Is AMMB 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.