Cahya Mata Sarawak Berhad (KLSE:CMSB) Is Increasing Its Dividend To MYR0.03

Cahya Mata Sarawak Berhad (KLSE:CMSB) has announced that it will be increasing its dividend from last year's comparable payment on the 26th of June to MYR0.03. This takes the annual payment to 3.0% of the current stock price, which is about average for the industry.

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Cahya Mata Sarawak Berhad's Projected Earnings Seem Likely To Cover Future Distributions

Solid dividend yields are great, but they only really help us if the payment is sustainable. Based on the last payment, Cahya Mata Sarawak Berhad was paying only paying out a fraction of earnings, but the payment was a massive 153% 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.

The next year is set to see EPS grow by 40.8%. Assuming the dividend continues along recent trends, we think the payout ratio could be 16% by next year, which is in a pretty sustainable range.

View our latest analysis for Cahya Mata Sarawak Berhad

Dividend Volatility

The company has a long dividend track record, but it doesn't look great with cuts in the past. The dividend has gone from an annual total of MYR0.135 in 2015 to the most recent total annual payment of MYR0.03. This works out to a decline of approximately 78% over that time. 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.

We Could See Cahya Mata Sarawak Berhad's Dividend Growing

With a relatively unstable dividend, and a poor history of shrinking dividends, it's even more important to see if EPS is growing. Cahya Mata Sarawak Berhad has seen EPS rising for the last five years, at 7.4% per annum. With a decent amount of growth and a low payout ratio, we think this bodes well for Cahya Mata Sarawak Berhad's prospects of growing its dividend payments in the future.

Our Thoughts On Cahya Mata Sarawak Berhad's Dividend

Overall, we always like to see the dividend being raised, but we don't think Cahya Mata Sarawak Berhad will make a great income stock. With cash flows lacking, it is difficult to see how the company can sustain a dividend payment. We would be a touch cautious of relying on this stock primarily for the dividend income.

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. For instance, we've picked out 1 warning sign for Cahya Mata Sarawak Berhad that investors should take into consideration. Is Cahya Mata Sarawak 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.