AMMB Holdings Berhad's (KLSE:AMBANK) Shareholders Will Receive A Bigger Dividend Than Last Year

AMMB Holdings Berhad (KLSE:AMBANK) has announced that it will be increasing its dividend from last year's comparable payment on the 8th of July to MYR0.199. The payment will take the dividend yield to 5.7%, which is in line with the average for the industry.

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AMMB Holdings Berhad's Earnings Will Easily Cover The Distributions

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. Based on AMMB Holdings Berhad's last earnings report, the payout ratio is at a decent 50%, meaning that the company is able to pay out its dividend with a bit of room to spare.

The next 3 years are set to see EPS grow by 11.5%. Analysts forecast the future payout ratio could be 52% over the same time horizon, which is a number we think the company can maintain.

View our latest analysis for AMMB Holdings Berhad

Dividend Volatility

Although the company has a long dividend history, it has been cut at least once in the last 10 years. Since 2015, the dividend has gone from MYR0.241 total annually to MYR0.302. This means that it has been growing its distributions at 2.3% 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.

The Dividend Has Growth Potential

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 impressed us by growing EPS at 6.3% per year over the past five years. The company is paying a reasonable amount of earnings to shareholders, and is growing earnings at a decent rate so we think it could be a decent dividend stock.

In Summary

Overall, it's great to see the dividend being raised and that it is still in a sustainable range. 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. For instance, we've picked out 1 warning sign for AMMB Holdings Berhad that investors should take into consideration. 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.