AMMB Holdings Berhad (KLSE:AMBANK) Will Pay A Larger Dividend Than Last Year At MYR0.123

AMMB Holdings Berhad (KLSE:AMBANK) has announced that it will be increasing its dividend from last year's comparable payment on the 7th of July to MYR0.123. This takes the annual payment to 5.0% of the current stock price, which is about average for the industry.

See our latest analysis for AMMB Holdings Berhad

AMMB Holdings Berhad's Payment Expected To Have Solid Earnings Coverage

While it is always good to see a solid dividend yield, we should also consider whether the payment is feasible.

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 34% is a good sign as this means that earnings decently cover dividends.

The next 3 years are set to see EPS grow by 11.3%. Analysts forecast the future payout ratio could be 39% over the same time horizon, which is a number we think the company can maintain.

Dividend Volatility

The company's dividend history has been marked by instability, with at least one cut in the last 10 years. Since 2013, the annual payment back then was MYR0.201, compared to the most recent full-year payment of MYR0.183. Dividend payments have shrunk at a rate of less than 1% per annum over this time frame. A company that decreases its dividend over time generally isn't what we are looking for.

We Could See AMMB Holdings Berhad's Dividend Growing

With a relatively unstable dividend, it's even more important to evaluate if earnings per share is growing, which could point to a growing dividend in the future. AMMB Holdings Berhad has impressed us by growing EPS at 7.7% 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.

In Summary

Overall, this is a reasonable dividend, and it being raised is an added bonus. The dividend has been at reasonable levels historically, but that hasn't translated into a consistent payment. This looks like it could be a good dividend stock going forward, but we would note that the payout ratio has been at higher levels in the past so it could happen again.

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. Just as an example, we've come across 2 warning signs for AMMB Holdings Berhad you should be aware of, and 1 of them is significant. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.

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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.