Asia Brands Berhad (KLSE:ASIABRN) Will Pay A Dividend Of MYR0.01

Asia Brands Berhad (KLSE:ASIABRN) will pay a dividend of MYR0.01 on the 15th of June. The dividend yield is 3.7% based on this payment, which is a little bit low compared to the other companies in the industry.

Check out our latest analysis for Asia Brands Berhad

Asia Brands Berhad's Earnings Easily Cover The Distributions

The dividend yield is a little bit low, but sustainability of the payments is also an important part of evaluating an income stock. However, prior to this announcement, Asia Brands Berhad's dividend was comfortably covered by both cash flow and earnings. This means that most of what the business earns is being used to help it grow.

If the trend of the last few years continues, EPS will grow by 66.0% over the next 12 months. If the dividend continues on this path, the payout ratio could be 19% 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 MYR0.05 in 2013, and the most recent fiscal year payment was MYR0.02. Doing the maths, this is a decline of about 8.8% per year. A company that decreases its dividend over time generally isn't what we are looking for.

The Dividend Looks Likely To Grow

Dividends have been going in the wrong direction, so we definitely want to see a different trend in the earnings per share. Asia Brands Berhad has impressed us by growing EPS at 66% per year over the past five years. A low payout ratio gives the company a lot of flexibility, and growing earnings also make it very easy for it to grow the dividend.

Asia Brands Berhad Looks Like A Great Dividend Stock

Overall, we like to see the dividend staying consistent, and we think Asia Brands Berhad might even raise payments in the future. 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.

Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. However, there are other things to consider for investors when analysing stock performance. For instance, we've picked out 2 warning signs for Asia Brands Berhad that investors should take into consideration. If you are a dividend investor, you might also want to look at our curated list of high yield dividend stocks.

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