Willowglen MSC Berhad (KLSE:WILLOW) Has Affirmed Its Dividend Of RM0.015

February 28, 2022
  •  Updated
April 20, 2022
KLSE:WILLOW
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Willowglen MSC Berhad's (KLSE:WILLOW) investors are due to receive a payment of RM0.015 per share on 18th of May. This makes the dividend yield 3.8%, which will augment investor returns quite nicely.

View our latest analysis for Willowglen MSC Berhad

Willowglen MSC Berhad's Earnings Easily Cover the Distributions

If the payments aren't sustainable, a high yield for a few years won't matter that much. Based on the last dividend, Willowglen MSC Berhad is earning enough to cover the payment, but the it makes up 111% of cash flows. This signals that the company is more focused on returning cash flow to shareholders, but it could mean that the dividend is exposed to cuts in the future.

EPS is set to fall by 3.5% over the next 12 months if recent trends continue. If the dividend continues along the path it has been on recently, we estimate the payout ratio could be 53%, which is definitely feasible to continue.

historic-dividend
KLSE:WILLOW Historic Dividend February 28th 2022

Dividend Volatility

The company has a long dividend track record, but it doesn't look great with cuts in the past. The last annual payment of RM0.015 was flat on the first annual payment 10 years ago. Modest growth in the dividend is good to see, but we think this is offset by historical cuts to the payments. It is hard to live on a dividend income if the company's earnings are not consistent.

Dividend Growth May Be Hard To Achieve

With a relatively unstable dividend, it's even more important to see if earnings per share is growing. Willowglen MSC Berhad has seen earnings per share falling at 3.5% per year over the last five years. If earnings continue declining, the company may have to make the difficult choice of reducing the dividend or even stopping it completely - the opposite of dividend growth.

Willowglen MSC Berhad's Dividend Doesn't Look Sustainable

Overall, it's nice to see a consistent dividend payment, but we think that longer term, the current level of payment might be unsustainable. While Willowglen MSC Berhad is earning enough to cover the payments, the cash flows are lacking. We would probably look elsewhere for an income investment.

It's important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. However, there are other things to consider for investors when analysing stock performance. For example, we've identified 3 warning signs for Willowglen MSC Berhad (1 can't be ignored!) that you should be aware of before investing. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.

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