FM Global Logistics Holdings Berhad (KLSE:FM) Is Due To Pay A Dividend Of MYR0.015

FM Global Logistics Holdings Berhad (KLSE:FM) has announced that it will pay a dividend of MYR0.015 per share on the 11th of April. This will take the dividend yield to an attractive 6.8%, providing a nice boost to shareholder returns.

Check out our latest analysis for FM Global Logistics Holdings Berhad

FM Global Logistics Holdings Berhad's Future Dividend Projections Appear Well Covered By Earnings

We like to see robust dividend yields, but that doesn't matter if the payment isn't sustainable. Before making this announcement, FM Global Logistics Holdings Berhad's was paying out quite a large proportion of earnings and 81% of free cash flows. This is usually an indication that the focus of the company is returning cash to shareholders rather than reinvesting it for growth.

The next year is set to see EPS grow by 40.7%. If the dividend continues along recent trends, we estimate the payout ratio will be 62%, which would make us comfortable with the sustainability of the dividend, despite the levels currently being quite high.

Dividend Volatility

The company's dividend history has been marked by instability, with at least one cut in the last 10 years. The dividend has gone from an annual total of MYR0.015 in 2015 to the most recent total annual payment of MYR0.04. This implies that the company grew its distributions at a yearly rate of about 10% over that duration. Dividends have grown rapidly over this time, but with cuts in the past we are not certain that this stock will be a reliable source of income in the future.

FM Global Logistics Holdings Berhad's Dividend Might Lack Growth

Growing earnings per share could be a mitigating factor when considering the past fluctuations in the dividend. It's encouraging to see that FM Global Logistics Holdings Berhad has been growing its earnings per share at 20% a year over the past five years. Recently, the company has been able to grow earnings at a decent rate, but with the payout ratio on the higher end we don't think the dividend has many prospects for growth.

Our Thoughts On FM Global Logistics Holdings Berhad's Dividend

In summary, while it's always good to see the dividend being raised, we don't think FM Global Logistics Holdings Berhad's payments are rock solid. While we generally think the level of distributions are a bit high, we wouldn't rule it out as becoming a good dividend payer in the future as its earnings are growing healthily. 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. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. Taking the debate a bit further, we've identified 2 warning signs for FM Global Logistics Holdings Berhad that investors need to be conscious of moving forward. Is FM Global Logistics 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.