Stock Analysis

Melewar Industrial Group Berhad (KLSE:MELEWAR) Passed Our Checks, And It's About To Pay A RM0.022 Dividend

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Melewar Industrial Group Berhad (KLSE:MELEWAR) stock is about to trade ex-dividend in 3 days. Investors can purchase shares before the 26th of March in order to be eligible for this dividend, which will be paid on the 28th of April.

Melewar Industrial Group Berhad's next dividend payment will be RM0.022 per share, on the back of last year when the company paid a total of RM0.045 to shareholders. Based on the last year's worth of payments, Melewar Industrial Group Berhad has a trailing yield of 8.6% on the current stock price of MYR0.52. Dividends are a major contributor to investment returns for long term holders, but only if the dividend continues to be paid. We need to see whether the dividend is covered by earnings and if it's growing.

Check out our latest analysis for Melewar Industrial Group Berhad

Dividends are typically paid out of company income, so if a company pays out more than it earned, its dividend is usually at a higher risk of being cut. Fortunately Melewar Industrial Group Berhad's payout ratio is modest, at just 32% of profit.

Click here to see how much of its profit Melewar Industrial Group Berhad paid out over the last 12 months.

KLSE:MELEWAR Historic Dividend March 22nd 2021

Have Earnings And Dividends Been Growing?

Businesses with strong growth prospects usually make the best dividend payers, because it's easier to grow dividends when earnings per share are improving. If earnings fall far enough, the company could be forced to cut its dividend. That's why it's comforting to see Melewar Industrial Group Berhad's earnings have been skyrocketing, up 41% per annum for the past five years. Melewar Industrial Group Berhad is paying out less than half its earnings and cash flow, while simultaneously growing earnings per share at a rapid clip. This is a very favourable combination that can often lead to the dividend multiplying over the long term, if earnings grow and the company pays out a higher percentage of its earnings.

Many investors will assess a company's dividend performance by evaluating how much the dividend payments have changed over time. Since the start of our data, 10 years ago, Melewar Industrial Group Berhad has lifted its dividend by approximately 8.4% a year on average. We're glad to see dividends rising alongside earnings over a number of years, which may be a sign the company intends to share the growth with shareholders.

To Sum It Up

Should investors buy Melewar Industrial Group Berhad for the upcoming dividend? Typically, companies that are growing rapidly and paying out a low fraction of earnings are keeping the profits for reinvestment in the business. This is one of the most attractive investment combinations under this analysis, as it can create substantial value for investors over the long run. In summary, Melewar Industrial Group Berhad appears to have some promise as a dividend stock, and we'd suggest taking a closer look at it.

So while Melewar Industrial Group Berhad looks good from a dividend perspective, it's always worthwhile being up to date with the risks involved in this stock. Every company has risks, and we've spotted 3 warning signs for Melewar Industrial Group Berhad you should know about.

We wouldn't recommend just buying the first dividend stock you see, though. Here's a list of interesting dividend stocks with a greater than 2% yield and an upcoming dividend.

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