Magni-Tech Industries Berhad (KLSE:MAGNI) Has Announced That It Will Be Increasing Its Dividend To RM0.028

Magni-Tech Industries Berhad (KLSE:MAGNI) will increase its dividend on the 28th of July to RM0.028, which is 87% higher than last year. This makes the dividend yield about the same as the industry average at 4.7%.

View our latest analysis for Magni-Tech Industries Berhad

Magni-Tech Industries Berhad's Earnings Easily Cover the Distributions

We aren't too impressed by dividend yields unless they can be sustained over time. Before making this announcement, Magni-Tech Industries Berhad was easily earning enough to cover the dividend. This means that most of its earnings are being retained to grow the business.

Looking forward, earnings per share is forecast to rise by 2.3% over the next year. If the dividend continues on this path, the payout ratio could be 45% by next year, which we think can be pretty sustainable going forward.

Dividend Volatility

The company has a long dividend track record, but it doesn't look great with cuts in the past. The first annual payment during the last 10 years was RM0.022 in 2011, and the most recent fiscal year payment was RM0.10. This implies that the company grew its distributions at a yearly rate of about 16% over that duration. Despite the rapid growth in the dividend over the past number of years, we have seen the payments go down the past as well, so that makes us cautious.

We Could See Magni-Tech Industries Berhad's Dividend Growing

With a relatively unstable dividend, it's even more important to see if earnings per share is growing. Magni-Tech Industries Berhad has seen EPS rising for the last five years, at 9.2% per annum. Magni-Tech Industries Berhad definitely has the potential to grow its dividend in the future with earnings on an uptrend and a low payout ratio.

We Really Like Magni-Tech Industries Berhad's Dividend

Overall, we think this could be an attractive income stock, and it is only getting better by paying a higher dividend this year. 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. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. As an example, we've identified 1 warning sign for Magni-Tech Industries Berhad that you should be aware of before investing. If you are a dividend investor, you might also want to look at our curated list of high performing dividend stock.

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