MTAG Group Berhad (KLSE:MTAG) Is Due To Pay A Dividend Of MYR0.01

MTAG Group Berhad (KLSE:MTAG) has announced that it will pay a dividend of MYR0.01 per share on the 25th of June. The yield is still above the industry average at 6.5%.

See our latest analysis for MTAG Group Berhad

MTAG Group Berhad's Dividend Is Well Covered By Earnings

If the payments aren't sustainable, a high yield for a few years won't matter that much. Prior to this announcement, MTAG Group Berhad's dividend was making up a very large proportion of earnings and perhaps more concerning was that it was 349% of cash flows. This is certainly a risk factor, as reduced cash flows could force the company to pay a lower dividend.

Looking forward, could fall by 68.4% if the company can't turn things around from the last few years. However, if the dividend continues along recent trends, we estimate the payout ratio could reach 92%, meaning that most of the company's earnings is being paid out to shareholders.

MTAG Group Berhad's Dividend Has Lacked Consistency

MTAG Group Berhad has been paying dividends for a while, but the track record isn't stellar. Due to this, we are a little bit cautious about the dividend consistency over a full economic cycle. The annual payment during the last 5 years was MYR0.02 in 2019, and the most recent fiscal year payment was MYR0.03. This means that it has been growing its distributions at 8.4% per annum over that time. It's good to see the dividend growing at a decent rate, but the dividend has been cut at least once in the past. MTAG Group Berhad might have put its house in order since then, but we remain cautious.

Dividend Growth Potential Is Shaky

Given that the dividend has been cut in the past, we need to check if earnings are growing and if that might lead to stronger dividends in the future. MTAG Group Berhad's EPS has fallen by approximately 68% per year during the past five years. Such rapid declines definitely have the potential to constrain dividend payments if the trend continues into the future.

MTAG Group Berhad's Dividend Doesn't Look Sustainable

Overall, the dividend looks like it may have been a bit high, which explains why it has now been cut. The payments are bit high to be considered sustainable, and the track record isn't the best. This company is not in the top tier of income providing stocks.

Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. Case in point: We've spotted 4 warning signs for MTAG Group Berhad (of which 2 are concerning!) you should know about. Is MTAG Group Berhad not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

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