Hong Leong Financial Group Berhad (KLSE:HLFG) Is Increasing Its Dividend To MYR0.36

Hong Leong Financial Group Berhad (KLSE:HLFG) has announced that it will be increasing its dividend from last year's comparable payment on the 21st of November to MYR0.36. Despite this raise, the dividend yield of 2.8% is only a modest boost to shareholder returns.

See our latest analysis for Hong Leong Financial Group Berhad

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

It would be nice for the yield to be higher, but we should also check if higher levels of dividend payment would be sustainable.

Hong Leong Financial Group Berhad has established itself as a dividend paying company with over 10 years history of distributing earnings to shareholders. Using data from its latest earnings report, Hong Leong Financial Group Berhad's payout ratio sits at 19%, an extremely comfortable number that shows that it can pay its dividend.

Looking forward, EPS is forecast to rise by 20.6% over the next 3 years. Analysts estimate the future payout ratio will be 18% over the same time period, which is in the range that makes us comfortable with the sustainability of the dividend.

Hong Leong Financial Group Berhad Has A Solid Track Record

Even over a long history of paying dividends, the company's distributions have been remarkably stable. The annual payment during the last 10 years was MYR0.36 in 2014, and the most recent fiscal year payment was MYR0.54. This implies that the company grew its distributions at a yearly rate of about 4.1% over that duration. Slow and steady dividend growth might not sound that exciting, but dividends have been stable for ten years, which we think makes this a fairly attractive offer.

The Dividend Looks Likely To Grow

Investors who have held shares in the company for the past few years will be happy with the dividend income they have received. Hong Leong Financial Group Berhad has seen EPS rising for the last five years, at 11% per annum. Growth in EPS bodes well for the dividend, as does the low payout ratio that the company is currently reporting.

Hong Leong Financial Group 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. The company is easily earning enough to cover its dividend payments and it is great to see that these earnings are being translated into cash flow. 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. Companies that are growing earnings tend to be the best dividend stocks over the long term. See what the 4 analysts we track are forecasting for Hong Leong Financial Group Berhad for free with public analyst estimates for the company. 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.