Bank Islam Malaysia Berhad (KLSE:BIMB) Is Due To Pay A Dividend Of MYR0.11

Bank Islam Malaysia Berhad (KLSE:BIMB) will pay a dividend of MYR0.11 on the 10th of January. This means the annual payment is 6.4% of the current stock price, which is above the average for the industry.

See our latest analysis for Bank Islam Malaysia Berhad

Bank Islam Malaysia Berhad's Earnings Will Easily Cover The Distributions

Impressive dividend yields are good, but this doesn't matter much if the payments can't be sustained.

Having paid out dividends for only 3 years, Bank Islam Malaysia Berhad does not have much of a history being a dividend paying company. Despite the company's shorter dividend history however, calculating for its payout ratio of 17% shows that Bank Islam Malaysia Berhad is able to comfortably pay dividends.

The next 3 years are set to see EPS grow by 23.7%. The future payout ratio could be 59% over that time period, according to analyst estimates, which is a good look for the future of the dividend.

Bank Islam Malaysia Berhad Is Still Building Its Track Record

The company has maintained a consistent dividend for a few years now, but we would like to see a longer track record before relying on it. Since 2021, the annual payment back then was MYR0.109, compared to the most recent full-year payment of MYR0.168. This means that it has been growing its distributions at 15% per annum over that time. Bank Islam Malaysia Berhad has been growing its dividend quite rapidly, which is exciting. However, the short payment history makes us question whether this performance will persist across a full market cycle.

The Dividend's Growth Prospects Are Limited

Investors could be attracted to the stock based on the quality of its payment history. Unfortunately things aren't as good as they seem. Unfortunately, Bank Islam Malaysia Berhad's earnings per share has been essentially flat over the past five years, which means the dividend may not be increased each year.

Our Thoughts On Bank Islam Malaysia Berhad's Dividend

In summary, dividends being cut isn't ideal, however it can bring the payment into a more sustainable range. While Bank Islam Malaysia Berhad is earning enough to cover the dividend, we are generally unimpressed with its future prospects. We would be a touch cautious of relying on this stock primarily for the dividend income.

Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. Given that earnings are not growing, the dividend does not look nearly so attractive. See if the 9 analysts are forecasting a turnaround in our free collection of analyst estimates here. Is Bank Islam Malaysia 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.