Astino Berhad (KLSE:ASTINO) Passed Our Checks, And It's About To Pay A RM0.015 Dividend

Regular readers will know that we love our dividends at Simply Wall St, which is why it's exciting to see Astino Berhad (KLSE:ASTINO) is about to trade ex-dividend in the next four days. This means that investors who purchase shares on or after the 9th of March will not receive the dividend, which will be paid on the 31st of March.

Astino Berhad's next dividend payment will be RM0.015 per share, and in the last 12 months, the company paid a total of RM0.015 per share. Based on the last year's worth of payments, Astino Berhad stock has a trailing yield of around 1.5% on the current share price of MYR0.97. Dividends are an important source of income to many shareholders, but the health of the business is crucial to maintaining those dividends. That's why we should always check whether the dividend payments appear sustainable, and if the company is growing.

See our latest analysis for Astino Berhad

Dividends are usually paid out of company profits, so if a company pays out more than it earned then its dividend is usually at greater risk of being cut. Astino Berhad is paying out just 14% of its profit after tax, which is comfortably low and leaves plenty of breathing room in the case of adverse events. That said, even highly profitable companies sometimes might not generate enough cash to pay the dividend, which is why we should always check if the dividend is covered by cash flow. It paid out 5.3% of its free cash flow as dividends last year, which is conservatively low.

It's positive to see that Astino Berhad's dividend is covered by both profits and cash flow, since this is generally a sign that the dividend is sustainable, and a lower payout ratio usually suggests a greater margin of safety before the dividend gets cut.

Click here to see how much of its profit Astino Berhad paid out over the last 12 months.

Have Earnings And Dividends Been Growing?

Stocks in companies that generate sustainable earnings growth often make the best dividend prospects, as it is easier to lift the dividend when earnings are rising. If business enters a downturn and the dividend is cut, the company could see its value fall precipitously. With that in mind, we're encouraged by the steady growth at Astino Berhad, with earnings per share up 8.6% on average over the last five years. Earnings per share have been growing at a decent rate, and the company is retaining more than three-quarters of its earnings in the business. This is an attractive combination, because when profits are reinvested effectively, growth can compound, with corresponding benefits for earnings and dividends in the future.

Many investors will assess a company's dividend performance by evaluating how much the dividend payments have changed over time. Astino Berhad has delivered an average of 1.8% per year annual increase in its dividend, based on the past 10 years of dividend payments.

To Sum It Up

Is Astino Berhad worth buying for its dividend? Earnings per share growth has been growing somewhat, and Astino Berhad is paying out less than half its earnings and cash flow as dividends. This is interesting for a few reasons, as it suggests management may be reinvesting heavily in the business, but it also provides room to increase the dividend in time. We would prefer to see earnings growing faster, but the best dividend stocks over the long term typically combine significant earnings per share growth with a low payout ratio, and Astino Berhad is halfway there. There's a lot to like about Astino Berhad, and we would prioritise taking a closer look at it.

So while Astino Berhad looks good from a dividend perspective, it's always worthwhile being up to date with the risks involved in this stock. Be aware that Astino Berhad is showing 4 warning signs in our investment analysis, and 1 of those is a bit concerning...

If you're in the market for dividend stocks, we recommend checking our list of top dividend stocks with a greater than 2% yield and an upcoming dividend.

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This article by Simply Wall St is general in nature. 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.
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