AEON Credit Service (M) Berhad (KLSE:AEONCR) Will Pay A Larger Dividend Than Last Year At MYR0.145

AEON Credit Service (M) Berhad's (KLSE:AEONCR) dividend will be increasing from last year's payment of the same period to MYR0.145 on 24th of July. This takes the dividend yield to 4.9%, which shareholders will be pleased with.

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AEON Credit Service (M) Berhad's Future Dividend Projections Appear Well Covered By Earnings

A big dividend yield for a few years doesn't mean much if it can't be sustained. AEON Credit Service (M) Berhad is quite easily earning enough to cover the dividend, however it is being let down by weak cash flows. With the company not bringing in any cash, paying out to shareholders is bound to become difficult at some point.

The next year is set to see EPS grow by 33.7%. Assuming the dividend continues along recent trends, we think the payout ratio could be 31% by next year, which is in a pretty sustainable range.

Check out our latest analysis for AEON Credit Service (M) Berhad

Dividend Volatility

The company's dividend history has been marked by instability, with at least one cut in the last 10 years. The annual payment during the last 10 years was MYR0.183 in 2015, and the most recent fiscal year payment was MYR0.288. This works out to be a compound annual growth rate (CAGR) of approximately 4.6% a year over that time. It's encouraging to see some dividend growth, but the dividend has been cut at least once, and the size of the cut would eliminate most of the growth anyway, which makes this less attractive as an income investment.

AEON Credit Service (M) Berhad Could Grow Its Dividend

With a relatively unstable dividend, it's even more important to see if earnings per share is growing. We are encouraged to see that AEON Credit Service (M) Berhad has grown earnings per share at 6.2% per year over the past five years. Growth in EPS bodes well for the dividend, as does the low payout ratio that the company is currently reporting.

Our Thoughts On AEON Credit Service (M) Berhad's Dividend

Overall, we always like to see the dividend being raised, but we don't think AEON Credit Service (M) Berhad will make a great income stock. While AEON Credit Service (M) Berhad is earning enough to cover the payments, the cash flows are lacking. This company is not in the top tier of income providing stocks.

It's important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. To that end, AEON Credit Service (M) Berhad has 2 warning signs (and 1 which is a bit concerning) we think you should know about. Is AEON Credit Service (M) Berhad not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.