Hong Leong Financial Group Berhad's (KLSE:HLFG) Shareholders Will Receive A Bigger Dividend Than Last Year

The board of Hong Leong Financial Group Berhad (KLSE:HLFG) has announced that it will be increasing its dividend by 13% on the 30th of March to MYR0.17, up from last year's comparable payment of MYR0.15. Even though the dividend went up, the yield is still quite low at only 2.5%.

Check out our latest analysis for Hong Leong Financial Group Berhad

Hong Leong Financial Group Berhad's Earnings Will Easily Cover The Distributions

The dividend yield is a little bit low, but sustainability of the payments is also an important part of evaluating an income stock.

Hong Leong Financial Group Berhad has established itself as a dividend paying company with over 10 years history of distributing earnings to shareholders. While past records don't necessarily translate into future results, the company's payout ratio of 20% also shows that Hong Leong Financial Group Berhad is able to comfortably pay dividends.

The next 3 years are set to see EPS grow by 20.4%. Analysts estimate the future payout ratio will be 24% 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

The company has been paying a dividend for a long time, and it has been quite stable which gives us confidence in the future dividend potential. The annual payment during the last 10 years was MYR0.25 in 2013, and the most recent fiscal year payment was MYR0.46. This means that it has been growing its distributions at 6.3% per annum over that time. Companies like this can be very valuable over the long term, if the decent rate of growth can be maintained.

The Dividend Looks Likely To Grow

The company's investors will be pleased to have been receiving dividend income for some time. We are encouraged to see that Hong Leong Financial Group Berhad has grown earnings per share at 11% per year over the past five years. 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 Financial Group Berhad Looks Like A Great Dividend Stock

Overall, a dividend increase is always good, and we think that Hong Leong Financial Group Berhad is a strong income stock thanks to its track record and growing earnings. Earnings are easily covering distributions, and the company is generating plenty of cash. All of these factors considered, we think this has solid potential as a dividend stock.

Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. For example, we've picked out 1 warning sign for Hong Leong Financial Group Berhad that investors should know about before committing capital to this stock. 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.