Dutch Lady Milk Industries Berhad's (KLSE:DLADY) Dividend Will Be MYR0.25

Dutch Lady Milk Industries Berhad (KLSE:DLADY) has announced that it will pay a dividend of MYR0.25 per share on the 17th of June. The dividend yield is 1.7% based on this payment, which is a little bit low compared to the other companies in the industry.

Our free stock report includes 1 warning sign investors should be aware of before investing in Dutch Lady Milk Industries Berhad. Read for free now.

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

It would be nice for the yield to be higher, but we should also check if higher levels of dividend payment would be sustainable. Based on the last payment, Dutch Lady Milk Industries Berhad was earning enough to cover the dividend, but free cash flows weren't positive. In general, we consider cash flow to be more important than earnings, so we would be cautious about relying on the sustainability of this dividend.

Looking forward, earnings per share is forecast to rise by 23.6% over the next year. Assuming the dividend continues along recent trends, we think the payout ratio could be 25% by next year, which is in a pretty sustainable range.

See our latest analysis for Dutch Lady Milk Industries Berhad

Dividend Volatility

Although the company has a long dividend history, it has been cut at least once in the last 10 years. Since 2015, the annual payment back then was MYR2.40, compared to the most recent full-year payment of MYR0.50. The dividend has fallen 79% over that period. Declining dividends isn't generally what we look for as they can indicate that the company is running into some challenges.

Dutch Lady Milk Industries Berhad May Find It Hard To Grow The Dividend

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. Unfortunately, Dutch Lady Milk Industries Berhad's earnings per share has been essentially flat over the past five years, which means the dividend may not be increased each year. While EPS growth is quite low, Dutch Lady Milk Industries Berhad has the option to increase the payout ratio to return more cash to shareholders.

Our Thoughts On Dutch Lady Milk Industries Berhad's Dividend

In summary, while it's good to see that the dividend hasn't been cut, we are a bit cautious about Dutch Lady Milk Industries Berhad's payments, as there could be some issues with sustaining them into the future. While the low payout ratio is a redeeming feature, this is offset by the minimal cash to cover the payments. 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. However, there are other things to consider for investors when analysing stock performance. As an example, we've identified 1 warning sign for Dutch Lady Milk Industries Berhad that you should be aware of before investing. If you are a dividend investor, you might also want to look at our curated list of high yield dividend stocks.

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