Hong Leong Bank Berhad's (KLSE:HLBANK) Shareholders Will Receive A Bigger Dividend Than Last Year

Hong Leong Bank Berhad's (KLSE:HLBANK) dividend will be increasing from last year's payment of the same period to MYR0.43 on 19th of November. Although the dividend is now higher, the yield is only 3.1%, which is below the industry average.

Check out our latest analysis for Hong Leong Bank Berhad

Hong Leong Bank Berhad's Payment Expected To Have Solid Earnings Coverage

If it is predictable over a long period, even low dividend yields can be attractive.

Hong Leong Bank 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 Hong Leong Bank Berhad's payout ratio of 33% is a good sign as this means that earnings decently cover dividends.

Looking forward, EPS is forecast to rise by 23.3% over the next 3 years. The future payout ratio could be 36% over that time period, according to analyst estimates, which is a good look for the future of the dividend.

Dividend Volatility

Although the company has a long dividend history, it has been cut at least once in the last 10 years. Since 2014, the dividend has gone from MYR0.45 total annually to MYR0.68. This means that it has been growing its distributions at 4.2% 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.

Hong Leong Bank Berhad Could Grow Its Dividend

With a relatively unstable dividend, it's even more important to see if earnings per share is growing. Hong Leong Bank Berhad has seen EPS rising for the last five years, at 9.5% per annum. A low payout ratio and decent growth suggests that the company is reinvesting well, and it also has plenty of room to increase the dividend over time.

Hong Leong Bank Berhad Looks Like A Great Dividend Stock

In summary, it is always positive to see the dividend being increased, and we are particularly pleased with its overall sustainability. 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.

Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. However, there are other things to consider for investors when analysing stock performance. For instance, we've picked out 1 warning sign for Hong Leong Bank Berhad that investors should take into consideration. 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.