Harrisons Holdings (Malaysia) Berhad's (KLSE:HARISON) Dividend Will Be Reduced To MYR0.065

Harrisons Holdings (Malaysia) Berhad (KLSE:HARISON) is reducing its dividend from last year's comparable payment to MYR0.065 on the 18th of August. The yield is still above the industry average at 4.5%.

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Harrisons Holdings (Malaysia) Berhad's Payment Could Potentially Have Solid Earnings Coverage

A big dividend yield for a few years doesn't mean much if it can't be sustained. Based on the last payment, Harrisons Holdings (Malaysia) Berhad was quite comfortably earning enough to cover the dividend. This means that a large portion of its earnings are being retained to grow the business.

If the trend of the last few years continues, EPS will grow by 10.9% over the next 12 months. If the dividend continues on this path, the payout ratio could be 54% by next year, which we think can be pretty sustainable going forward.

View our latest analysis for Harrisons Holdings (Malaysia) Berhad

Dividend Volatility

Although the company has a long dividend history, it has been cut at least once in the last 10 years. Since 2015, the annual payment back then was MYR0.03, compared to the most recent full-year payment of MYR0.065. This works out to be a compound annual growth rate (CAGR) of approximately 8.0% a year over that time. A reasonable rate of dividend growth is good to see, but we're wary that the dividend history is not as solid as we'd like, having been cut at least once.

The Dividend Looks Likely To Grow

With a relatively unstable dividend, it's even more important to see if earnings per share is growing. Harrisons Holdings (Malaysia) Berhad has impressed us by growing EPS at 11% per year over the past five years. The company is paying a reasonable amount of earnings to shareholders, and is growing earnings at a decent rate so we think it could be a decent dividend stock.

We Really Like Harrisons Holdings (Malaysia) Berhad's Dividend

It is generally not great to see the dividend being cut, but we don't think this should happen much if at all in the future given that Harrisons Holdings (Malaysia) Berhad has the makings of a solid income stock moving forward. The cut will allow the company to continue paying out the dividend without putting the balance sheet under pressure, which means that it could remain sustainable for longer. All of these factors considered, we think this has solid potential as a dividend stock.

Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. For example, we've picked out 2 warning signs for Harrisons Holdings (Malaysia) 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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