Matrix Concepts Holdings Berhad (KLSE:MATRIX) Has Announced A Dividend Of RM0.037

Matrix Concepts Holdings Berhad (KLSE:MATRIX) will pay a dividend of RM0.037 on the 7th of July. This means the annual payment is 5.1% of the current stock price, which is above the average for the industry.

Check out our latest analysis for Matrix Concepts Holdings Berhad

Matrix Concepts Holdings Berhad's Dividend Is Well Covered By Earnings

A big dividend yield for a few years doesn't mean much if it can't be sustained. Prior to this announcement, Matrix Concepts Holdings Berhad's dividend was only 51% of earnings, however it was paying out 113% of free cash flows. While the company may be more focused on returning cash to shareholders than growing the business at this time, we think that a cash payout ratio this high might expose the dividend to being cut if the business ran into some challenges.

Over the next year, EPS is forecast to expand by 21.8%. If the dividend continues on this path, the payout ratio could be 41% by next year, which we think can be pretty sustainable going forward.

Matrix Concepts Holdings Berhad's Dividend Has Lacked Consistency

Matrix Concepts Holdings Berhad has been paying dividends for a while, but the track record isn't stellar. If the company cuts once, it definitely isn't argument against the possibility of it cutting in the future. Since 2013, the first annual payment was RM0.13, compared to the most recent full-year payment of RM0.13. Payments have been decreasing at a very slow pace in this time period. A company that decreases its dividend over time generally isn't what we are looking for.

Matrix Concepts Holdings Berhad May Find It Hard To Grow The Dividend

Given that the dividend has been cut in the past, we need to check if earnings are growing and if that might lead to stronger dividends in the future. Unfortunately, Matrix Concepts Holdings Berhad's earnings per share has been essentially flat over the past five years, which means the dividend may not be increased each year.

Matrix Concepts Holdings Berhad's Dividend Doesn't Look Sustainable

Overall, we don't think this company makes a great dividend stock, even though the dividend wasn't cut this year. While the low payout ratio is redeeming feature, this is offset by the minimal cash to cover the payments. We would be a touch cautious of relying on this stock primarily for the dividend income.

Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. For instance, we've picked out 1 warning sign for Matrix Concepts Holdings Berhad that investors should take into consideration. Is Matrix Concepts Holdings 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.