Apollo Food Holdings Berhad's (KLSE:APOLLO) Dividend Will Be Reduced To MYR0.15

Apollo Food Holdings Berhad's (KLSE:APOLLO) dividend is being reduced from last year's payment covering the same period to MYR0.15 on the 11th of January. Despite the cut, the dividend yield of 4.0% will still be comparable to other companies in the industry.

Check out our latest analysis for Apollo Food Holdings Berhad

Apollo Food Holdings Berhad Doesn't Earn Enough To Cover Its Payments

We like to see a healthy dividend yield, but that is only helpful to us if the payment can continue. Prior to this announcement, the company was paying out 120% of what it was earning. It will be difficult to sustain this level of payout so we wouldn't be confident about this continuing.

If the company can't turn things around, EPS could fall by 11.0% over the next year. If the dividend continues along the path it has been on recently, the payout ratio in 12 months could be 133%, which is definitely a bit high to be 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 annual payment during the last 10 years was MYR0.20 in 2012, and the most recent fiscal year payment was MYR0.15. Doing the maths, this is a decline of about 2.8% per year. Generally, we don't like to see a dividend that has been declining over time as this can degrade shareholders' returns and indicate that the company may be running into problems.

The Dividend Has Limited Growth Potential

Growing earnings per share could be a mitigating factor when considering the past fluctuations in the dividend. Apollo Food Holdings Berhad's EPS has fallen by approximately 11% 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.

Apollo Food Holdings Berhad's Dividend Doesn't Look Great

Overall, the dividend looks like it may have been a bit high, which explains why it has now been cut. The company seems to be stretching itself a bit to make such big payments, but it doesn't appear they can be consistent over time. Overall, this doesn't get us very excited from an income standpoint.

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. Just as an example, we've come across 4 warning signs for Apollo Food Holdings Berhad you should be aware of, and 2 of them are potentially serious. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.

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