Shangri-La Hotels (Malaysia) Berhad (KLSE:SHANG) Has Announced A Dividend Of MYR0.05

Shangri-La Hotels (Malaysia) Berhad's (KLSE:SHANG) investors are due to receive a payment of MYR0.05 per share on 30th of June. However, the dividend yield of 5.7% is still a decent boost to shareholder returns.

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Shangri-La Hotels (Malaysia) Berhad's Future Dividends May Potentially Be At Risk

If the payments aren't sustainable, a high yield for a few years won't matter that much. Based on the last payment, Shangri-La Hotels (Malaysia) Berhad's profits didn't cover the dividend, but the company was generating enough cash instead. Given that the dividend is a cash outflow, we think that cash is more important than accounting measures of profit when assessing the dividend, so this is a mitigating factor.

EPS is set to fall by 14.3% over the next 12 months if recent trends continue. Assuming the dividend continues along recent trends, we believe the payout ratio could reach 136%, which could put the dividend under pressure if earnings don't start to improve.

Check out our latest analysis for Shangri-La Hotels (Malaysia) Berhad

Dividend Volatility

The company has a long dividend track record, but it doesn't look great with cuts in the past. The dividend has gone from an annual total of MYR0.13 in 2015 to the most recent total annual payment of MYR0.10. The dividend has shrunk at around 2.6% a year during that period. A company that decreases its dividend over time generally isn't what we are looking for.

The Dividend Has Limited Growth Potential

Growing earnings per share could be a mitigating factor when considering the past fluctuations in the dividend. Earnings per share has been sinking by 14% over the last five years. Such rapid declines definitely have the potential to constrain dividend payments if the trend continues into the future.

The Dividend Could Prove To Be Unreliable

Overall, it's not great to see that the dividend has been cut, but this might be explained by the payments being a bit high previously. The payments haven't been particularly stable and we don't see huge growth potential, but with the dividend well covered by cash flows it could prove to be reliable over the short term. This company is not in the top tier of income providing stocks.

Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. However, there are other things to consider for investors when analysing stock performance. For example, we've picked out 1 warning sign for Shangri-La Hotels (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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