Carlsberg Brewery Malaysia Berhad (KLSE:CARLSBG) Will Pay A Larger Dividend Than Last Year At RM0.46

The board of Carlsberg Brewery Malaysia Berhad (KLSE:CARLSBG) has announced that it will be increasing its dividend on the 12th of May to RM0.46. This takes the annual payment to 2.7% of the current stock price, which is about average for the industry.

Check out our latest analysis for Carlsberg Brewery Malaysia Berhad

Carlsberg Brewery Malaysia Berhad's Earnings Easily Cover the Distributions

While it is always good to see a solid dividend yield, we should also consider whether the payment is feasible. Prior to this announcement, Carlsberg Brewery Malaysia Berhad was paying out 85% of earnings and more than 75% of free cash flows. This is usually an indication that the focus of the company is returning cash to shareholders rather than reinvesting it for growth.

Looking forward, earnings per share is forecast to rise by 28.3% over the next year. Under the assumption that the dividend will continue along recent trends, we think the payout ratio could be 64% which would be quite comfortable going to take the dividend forward.

Dividend Volatility

The company's dividend history has been marked by instability, with at least 1 cut in the last 10 years. Since 2012, the dividend has gone from RM0.58 to RM0.56. Dividend payments have shrunk at a rate of less than 1% per annum over this time frame. Declining dividends isn't generally what we look for as they can indicate that the company is running into some challenges.

Carlsberg Brewery Malaysia Berhad May Find It Hard To Grow The Dividend

With a relatively unstable dividend, it's even more important to see if earnings per share is growing. Carlsberg Brewery Malaysia Berhad hasn't seen much change in its earnings per share over the last five years.

Carlsberg Brewery Malaysia Berhad's Dividend Doesn't Look Sustainable

Overall, we always like to see the dividend being raised, but we don't think Carlsberg Brewery Malaysia Berhad will make a great income stock. The payments are bit high to be considered sustainable, and the track record isn't the best. We don't think Carlsberg Brewery Malaysia Berhad is a great stock to add to your portfolio if income is your focus.

Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. For instance, we've picked out 1 warning sign for Carlsberg Brewery Malaysia Berhad that investors should take into consideration. Is Carlsberg Brewery Malaysia 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.