Cahya Mata Sarawak Berhad (KLSE:CMSB) Is Increasing Its Dividend To MYR0.03
Cahya Mata Sarawak Berhad's (KLSE:CMSB) dividend will be increasing from last year's payment of the same period to MYR0.03 on 28th of June. This takes the annual payment to 2.7% of the current stock price, which is about average for the industry.
View our latest analysis for Cahya Mata Sarawak Berhad
Cahya Mata Sarawak Berhad's Earnings Easily Cover The Distributions
Unless the payments are sustainable, the dividend yield doesn't mean too much. Based on the last payment, Cahya Mata Sarawak Berhad was earning enough to cover the dividend, but free cash flows weren't positive. In general, we consider cash flow to be more important than earnings, so we would be cautious about relying on the sustainability of this dividend.
Over the next year, EPS is forecast to fall by 19.8%. If the dividend continues along the path it has been on recently, we estimate the payout ratio could be 14%, which is comfortable for the company to continue in the future.
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 MYR0.0333 in 2013 to the most recent total annual payment of MYR0.03. The dividend has shrunk at around 1.0% a year during that period. A company that decreases its dividend over time generally isn't what we are looking for.
Cahya Mata Sarawak Berhad May Find It Hard To Grow The Dividend
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. Earnings have grown at around 3.1% a year for the past five years, which isn't massive but still better than seeing them shrink. If Cahya Mata Sarawak Berhad is struggling to find viable investments, it always has the option to increase its payout ratio to pay more to shareholders.
Our Thoughts On Cahya Mata Sarawak Berhad's Dividend
In summary, while it's always good to see the dividend being raised, we don't think Cahya Mata Sarawak Berhad's payments are rock solid. While Cahya Mata Sarawak Berhad is earning enough to cover the payments, the cash flows are lacking. Overall, we don't think this company has the makings of a good income stock.
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. For example, we've picked out 2 warning signs for Cahya Mata Sarawak Berhad that investors should know about before committing capital to this stock. 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.
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