PBA Holdings Bhd (KLSE:PBA) Has Announced A Dividend Of MYR0.015

The board of PBA Holdings Bhd (KLSE:PBA) has announced that it will pay a dividend on the 13th of January, with investors receiving MYR0.015 per share. This payment means that the dividend yield will be 3.3%, which is around the industry average.

View our latest analysis for PBA Holdings Bhd

PBA Holdings Bhd's Earnings Easily Cover The Distributions

Unless the payments are sustainable, the dividend yield doesn't mean too much. However, prior to this announcement, PBA Holdings Bhd'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.

EPS is set to fall by 2.8% 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 15%, which is definitely feasible to continue.

Dividend Volatility

The company has a long dividend track record, but it doesn't look great with cuts in the past. The dividend has gone from an annual total of MYR0.035 in 2012 to the most recent total annual payment of MYR0.025. This works out to be a decline of approximately 3.3% per year over that time. Declining dividends isn't generally what we look for as they can indicate that the company is running into some challenges.

The Dividend's Growth Prospects Are Limited

With a relatively unstable dividend, it's even more important to evaluate if earnings per share is growing, which could point to a growing dividend in the future. In the last five years, PBA Holdings Bhd's earnings per share has shrunk at approximately 2.8% per annum. If the company is making less over time, it naturally follows that it will also have to pay out less in dividends.

Our Thoughts On PBA Holdings Bhd's Dividend

In summary, while it's good to see that the dividend hasn't been cut, we are a bit cautious about PBA Holdings Bhd's payments, as there could be some issues with sustaining them into the future. The company is generating plenty of cash, which could maintain the dividend for a while, but the track record hasn't been great. Overall, we don't think this company has the makings of a good income stock.

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 2 warning signs for PBA Holdings Bhd 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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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.