DXN Holdings Bhd (KLSE:DXN) Will Pay A Dividend Of MYR0.01

The board of DXN Holdings Bhd. (KLSE:DXN) has announced that it will pay a dividend of MYR0.01 per share on the 30th of May. The dividend yield will be 7.1% based on this payment which is still above the industry average.

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DXN Holdings Bhd's Payment Could Potentially Have Solid Earnings Coverage

While it is great to have a strong dividend yield, we should also consider whether the payment is sustainable. The last dividend was quite easily covered by DXN Holdings Bhd's earnings. This indicates that quite a large proportion of earnings is being invested back into the business.

The next year is set to see EPS grow by 54.9%. If the dividend continues along recent trends, we estimate the payout ratio will be 7.0%, which is in the range that makes us comfortable with the sustainability of the dividend.

See our latest analysis for DXN Holdings Bhd

DXN Holdings Bhd Doesn't Have A Long Payment History

The dividend hasn't seen any major cuts in the past, but the company has only been paying a dividend for 2 years, which isn't that long in the grand scheme of things. Since 2023, the annual payment back then was MYR0.016, compared to the most recent full-year payment of MYR0.037. This implies that the company grew its distributions at a yearly rate of about 52% over that duration. We're not overly excited about the relatively short history of dividend payments, however the dividend is growing at a nice rate and we might take a closer look.

DXN Holdings Bhd Could Grow Its Dividend

The company's investors will be pleased to have been receiving dividend income for some time. DXN Holdings Bhd has impressed us by growing EPS at 5.7% per year over the past five years. Earnings are on the uptrend, and it is only paying a small portion of those earnings to shareholders.

Our Thoughts On DXN Holdings Bhd's Dividend

In summary, we are pleased with the dividend remaining consistent, and we think there is a good chance of this continuing in the future. The dividend has been at reasonable levels historically, but that hasn't translated into a consistent payment. Taking all of this into consideration, the dividend looks viable moving forward, but investors should be mindful that the company has pushed the boundaries of sustainability in the past and may do so again.

Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. Earnings growth generally bodes well for the future value of company dividend payments. See if the 3 DXN Holdings Bhd analysts we track are forecasting continued growth with our free report on analyst estimates for the company. Is DXN Holdings Bhd not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

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