The board of Glomac Berhad (KLSE:GLOMAC) has announced that it will pay a dividend on the 18th of December, with investors receiving MYR0.0125 per share. The dividend yield is 2.9% based on this payment, which is a little bit low compared to the other companies in the industry.
Check out our latest analysis for Glomac Berhad
Glomac Berhad's Payment Could Potentially Have Solid Earnings Coverage
It would be nice for the yield to be higher, but we should also check if higher levels of dividend payment would be sustainable. However, prior to this announcement, Glomac Berhad's dividend was comfortably covered by both cash flow and earnings. This means that most of its earnings are being retained to grow the business.
Over the next year, EPS is forecast to expand by 17.8%. If the dividend continues on this path, the payout ratio could be 25% by next year, which we think can be pretty sustainable going forward.
Dividend Volatility
The company's dividend history has been marked by instability, with at least one cut in the last 10 years. The annual payment during the last 10 years was MYR0.0636 in 2014, and the most recent fiscal year payment was MYR0.0125. The dividend has fallen 80% over that period. A company that decreases its dividend over time generally isn't what we are looking for.
We Could See Glomac Berhad's Dividend Growing
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. Glomac Berhad has seen EPS rising for the last five years, at 9.7% per annum. Glomac Berhad definitely has the potential to grow its dividend in the future with earnings on an uptrend and a low payout ratio.
We Really Like Glomac Berhad's Dividend
In summary, it is good to see that the dividend is staying consistent, and we don't think there is any reason to suspect this might change over the medium term. Distributions are quite easily covered by earnings, which are also being converted to cash flows. All in all, this checks a lot of the boxes we look for when choosing an income stock.
It's important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic 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 3 warning signs for Glomac Berhad that investors need to be conscious of moving forward. Is Glomac 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.
About KLSE:GLOMAC
Glomac Berhad
An investment holding company, engages in the property development business in Malaysia.
Adequate balance sheet with moderate growth potential.
