MISC Berhad (KLSE:MISC) has announced that it will pay a dividend of MYR0.08 per share on the 27th of June. This makes the dividend yield about the same as the industry average at 4.3%.
See our latest analysis for MISC Berhad
MISC Berhad's Dividend Is Well Covered By Earnings
We aren't too impressed by dividend yields unless they can be sustained over time. Before this announcement, MISC Berhad was paying out 76% of earnings, but a comparatively small 51% of free cash flows. In general, cash flows are more important than earnings, so we are comfortable that the dividend will be sustainable going forward, especially with so much cash left over for reinvestment.
The next year is set to see EPS grow by 30.1%. Assuming the dividend continues along the course it has been charting recently, our estimates show the payout ratio being 65% which brings it into quite a comfortable range.
MISC Berhad Has A Solid Track Record
The company has an extended history of paying stable dividends. The annual payment during the last 10 years was MYR0.05 in 2014, and the most recent fiscal year payment was MYR0.36. This implies that the company grew its distributions at a yearly rate of about 22% over that duration. We can see that payments have shown some very nice upward momentum without faltering, which provides some reassurance that future payments will also be reliable.
MISC Berhad Might Find It Hard To Grow Its Dividend
The company's investors will be pleased to have been receiving dividend income for some time. It's encouraging to see that MISC Berhad has been growing its earnings per share at 10% 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.
In Summary
In summary, it's great to see that the company can raise the dividend and keep it in a sustainable range. The payments look pretty sustainable with good earnings coverage and a reasonable track record. This looks like it could be a good dividend stock going forward, but we would note that the payout ratio has been at higher levels in the past so it could happen again.
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. Earnings growth generally bodes well for the future value of company dividend payments. See if the 14 MISC Berhad analysts we track are forecasting continued growth with our free report on analyst estimates for the company. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.
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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:MISC
MISC Berhad
Provides energy-related maritime solutions and services worldwide.
Excellent balance sheet established dividend payer.
