Sunmow Holding Berhad (KLSE:SUNMOW) Is Due To Pay A Dividend Of MYR0.0165

Sunmow Holding Berhad (KLSE:SUNMOW) will pay a dividend of MYR0.0165 on the 22nd of December. Including this payment, the dividend yield on the stock will be 1.4%, which is a modest boost for shareholders' returns.

View our latest analysis for Sunmow Holding Berhad

Sunmow Holding Berhad's Payment Has 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. Based on the last payment, Sunmow Holding Berhad was quite comfortably earning enough to cover the dividend. This indicates that quite a large proportion of earnings is being invested back into the business.

If the trend of the last few years continues, EPS will grow by 46.4% over the next 12 months. If the dividend continues on this path, the payout ratio could be 39% by next year, which we think can be pretty sustainable going forward.

Sunmow Holding Berhad Is Still Building Its Track Record

It's not possible for us to make a backward looking judgement just based on a short payment history. This doesn't mean that the company can't pay a good dividend, but just that we want to wait until it can prove itself.

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. It's encouraging to see that Sunmow Holding Berhad has been growing its earnings per share at 46% a year over the past five years. Sunmow Holding Berhad is clearly able to grow rapidly while still returning cash to shareholders, positioning it to become a strong dividend payer in the future.

We Really Like Sunmow Holding Berhad's Dividend

Overall, we like to see the dividend staying consistent, and we think Sunmow Holding Berhad might even raise payments in the future. 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. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. Case in point: We've spotted 2 warning signs for Sunmow Holding Berhad (of which 1 is a bit unpleasant!) you should know about. Is Sunmow Holding Berhad not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

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