Rhone Ma Holdings Berhad (KLSE:RHONEMA) Will Pay A Dividend Of MYR0.01

The board of Rhone Ma Holdings Berhad (KLSE:RHONEMA) has announced that it will pay a dividend of MYR0.01 per share on the 14th of July. This makes the dividend yield 3.9%, which will augment investor returns quite nicely.

Our free stock report includes 2 warning signs investors should be aware of before investing in Rhone Ma Holdings Berhad. Read for free now.

Rhone Ma Holdings Berhad's Future Dividend Projections Appear Well Covered By Earnings

Impressive dividend yields are good, but this doesn't matter much if the payments can't be sustained. Based on the last payment, Rhone Ma Holdings Berhad was quite comfortably earning enough to cover the dividend. This means that a large portion of its earnings are being retained to grow the business.

Over the next year, EPS could expand by 3.3% if recent trends continue. Assuming the dividend continues along recent trends, we think the payout ratio could be 38% by next year, which is in a pretty sustainable range.

See our latest analysis for Rhone Ma Holdings Berhad

Rhone Ma Holdings Berhad's Dividend Has Lacked Consistency

It's comforting to see that Rhone Ma Holdings Berhad has been paying a dividend for a number of years now, however it has been cut at least once in that time. This suggests that the dividend might not be the most reliable. The dividend has gone from an annual total of MYR0.0364 in 2017 to the most recent total annual payment of MYR0.025. This works out to be a decline of approximately 4.6% per year over that time. Declining dividends isn't generally what we look for as they can indicate that the company is running into some challenges.

The Dividend's Growth Prospects Are Limited

With a relatively unstable dividend, it's even more important to see if earnings per share is growing. Earnings per share has been crawling upwards at 3.3% per year. The company has been growing at a pretty soft 3.3% per annum, and is paying out quite a lot of its earnings to shareholders. This isn't necessarily bad, but we wouldn't expect rapid dividend growth in the future.

In Summary

In summary, we are pleased with the dividend remaining consistent, and we think there is a good chance of this continuing in the future. While the payout ratios are a good sign, we are less enthusiastic about the company's dividend record. The dividend looks okay, but there have been some issues in the past, so we would be a little bit cautious.

Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. Taking the debate a bit further, we've identified 2 warning signs for Rhone Ma Holdings Berhad that investors need to be conscious of moving forward. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.

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