Bank Islam Malaysia Berhad (KLSE:BIMB) Will Pay A Dividend Of MYR0.10

Bank Islam Malaysia Berhad (KLSE:BIMB) will pay a dividend of MYR0.10 on the 9th of January. However, the dividend yield of 6.6% is still a decent boost to shareholder returns.

Trump has pledged to "unleash" American oil and gas and these 15 US stocks have developments that are poised to benefit.

Bank Islam Malaysia Berhad's Dividend Forecasted To Be Well Covered By Earnings

While it is great to have a strong dividend yield, we should also consider whether the payment is sustainable.

Bank Islam Malaysia Berhad has a short history of paying out dividends, with its current track record at only 4 years. While it has a shorter history of paying out dividends, Bank Islam Malaysia Berhad's payout ratio of 13% is a great sign for current shareholders, as this means that earnings greatly cover dividends.

Over the next 3 years, EPS is forecast to expand by 21.2%. Analysts forecast the future payout ratio could be 60% over the same time horizon, which is a number we think the company can maintain.

View our latest analysis for Bank Islam Malaysia Berhad

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. The annual payment during the last 4 years was MYR0.109 in 2021, and the most recent fiscal year payment was MYR0.151. This works out to be a compound annual growth rate (CAGR) of approximately 8.5% a year over that time. Bank Islam Malaysia Berhad has been growing its dividend at a decent rate, and the payments have been stable. However, the payment history is very short, so there is no evidence yet that the dividend can be sustained over a full economic cycle.

The Dividend's Growth Prospects Are Limited

Investors could be attracted to the stock based on the quality of its payment history. Earnings per share has been crawling upwards at 2.8% per year. While EPS growth is quite low, Bank Islam Malaysia Berhad has the option to increase the payout ratio to return more cash to shareholders.

In Summary

Even though the dividend was cut this year, we think Bank Islam Malaysia Berhad has the ability to make consistent payments in the future. While the payout ratios are a good sign, we are less enthusiastic about the company's dividend record. The dividend looks okay, but there have been some issues in the past, so we would be a little bit cautious.

It's important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. Earnings growth generally bodes well for the future value of company dividend payments. See if the 8 Bank Islam Malaysia Berhad analysts we track are forecasting continued growth with our free report on analyst estimates for the company. Is Bank Islam Malaysia Berhad not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.