Dutch Lady Milk Industries Berhad (KLSE:DLADY) Will Pay A Dividend Of MYR0.25

Dutch Lady Milk Industries Berhad (KLSE:DLADY) has announced that it will pay a dividend of MYR0.25 per share on the 10th of December. This means the annual payment will be 1.7% of the current stock price, which is lower than the industry average.

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Dutch Lady Milk Industries Berhad's Future Dividend Projections Appear Well Covered By Earnings

Even a low dividend yield can be attractive if it is sustained for years on end. Based on the last payment, Dutch Lady Milk Industries Berhad was paying only paying out a fraction of earnings, but the payment was a massive 237% of cash flows. While the business may be attempting to set a balanced dividend policy, a cash payout ratio this high might expose the dividend to being cut if the business ran into some challenges.

Over the next year, EPS is forecast to expand by 65.1%. If the dividend continues along recent trends, we estimate the payout ratio will be 16%, which is in the range that makes us comfortable with the sustainability of the dividend.

See our latest analysis for Dutch Lady Milk Industries Berhad

Dividend Volatility

The company has a long dividend track record, but it doesn't look great with cuts in the past. Since 2015, the dividend has gone from MYR2.20 total annually to MYR0.50. This works out to a decline of approximately 77% over that time. A company that decreases its dividend over time generally isn't what we are looking for.

We Could See Dutch Lady Milk Industries Berhad's Dividend Growing

Given that dividend payments have been shrinking like a glacier in a warming world, we need to check if there are some bright spots on the horizon. Dutch Lady Milk Industries Berhad has seen EPS rising for the last five years, at 6.8% per annum. Growth in EPS bodes well for the dividend, as does the low payout ratio that the company is currently reporting.

In Summary

Overall, it's nice to see a consistent dividend payment, but we think that longer term, the current level of payment might be unsustainable. While Dutch Lady Milk Industries 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. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. You can also discover whether shareholders are aligned with insider interests by checking our visualisation of insider shareholdings and trades in Dutch Lady Milk Industries Berhad stock. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.

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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.