Panasonic Manufacturing Malaysia Berhad (KLSE:PANAMY) Has Announced A Dividend Of RM0.15

By
Simply Wall St
Published
November 26, 2021
KLSE:PANAMY
Source: Shutterstock

Panasonic Manufacturing Malaysia Berhad (KLSE:PANAMY) will pay a dividend of RM0.15 on the 21st of January. This payment means that the dividend yield will be 5.5%, which is around the industry average.

Check out our latest analysis for Panasonic Manufacturing Malaysia Berhad

Panasonic Manufacturing Malaysia Berhad Doesn't Earn Enough To Cover Its Payments

Unless the payments are sustainable, the dividend yield doesn't mean too much. Before making this announcement, the company's dividend was much higher than its earnings. Without profits and cash flows increasing, it would be difficult for the company to continue paying the dividend at this level.

The next 12 months is set to see EPS grow by 7.6%. Assuming the dividend continues along recent trends, we think the payout ratio could reach 107%, which probably can't continue putting some pressure on the balance sheet.

historic-dividend
KLSE:PANAMY Historic Dividend November 26th 2021

Dividend Volatility

Although the company has a long dividend history, it has been cut at least once in the last 10 years. Since 2011, the dividend has gone from RM1.20 to RM1.63. This implies that the company grew its distributions at a yearly rate of about 3.1% over that duration. We're glad to see the dividend has risen, but with a limited rate of growth and fluctuations in the payments the total shareholder return may be limited.

Dividend Growth Is Doubtful

With a relatively unstable dividend, it's even more important to see if earnings per share is growing. It's not great to see that Panasonic Manufacturing Malaysia Berhad's earnings per share has fallen at approximately 7.1% per year over the past five years. Declining earnings will inevitably lead to the company paying a lower dividend in line with lower profits. Earnings are forecast to grow over the next 12 months and if that happens we could still be a little bit cautious until it becomes a pattern.

We're Not Big Fans Of Panasonic Manufacturing Malaysia Berhad's Dividend

Overall, this isn't a great candidate as an income investment, even though the dividend was stable this year. The company isn't making enough to be paying as much as it is, and the other factors don't look particularly promising either. We don't think that this is a great candidate to be an income stock.

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. For example, we've identified 2 warning signs for Panasonic Manufacturing Malaysia Berhad (1 makes us a bit uncomfortable!) 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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