Dominant Enterprise Berhad (KLSE:DOMINAN) Has Announced A Dividend Of MYR0.005
The board of Dominant Enterprise Berhad (KLSE:DOMINAN) has announced that it will pay a dividend on the 22nd of December, with investors receiving MYR0.005 per share. This payment means the dividend yield will be 2.3%, which is below the average for the industry.
View our latest analysis for Dominant Enterprise Berhad
Dominant Enterprise Berhad's Earnings Easily Cover The Distributions
If it is predictable over a long period, even low dividend yields can be attractive. Dominant Enterprise Berhad is quite easily earning enough to cover the dividend, however it is being let down by weak cash flows. With the company not bringing in any cash, paying out to shareholders is bound to become difficult at some point.
Over the next year, EPS could expand by 3.9% if recent trends continue. If the dividend continues on this path, the payout ratio could be 24% by next year, which we think can be pretty sustainable going forward.
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 2012 to the most recent total annual payment of MYR0.02. The dividend has shrunk at around 5.0% a year during that period. A company that decreases its dividend over time generally isn't what we are looking for.
Dominant Enterprise Berhad May Find It Hard To Grow The Dividend
With a relatively unstable dividend, it's even more important to see if earnings per share is growing. Earnings have grown at around 3.9% a year for the past five years, which isn't massive but still better than seeing them shrink. While growth may be thin on the ground, Dominant Enterprise Berhad could always pay out a higher proportion of earnings to increase shareholder returns.
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 the low payout ratio is a redeeming feature, this is offset by the minimal cash to cover the payments. This company is not in the top tier of income providing stocks.
It's important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. Case in point: We've spotted 5 warning signs for Dominant Enterprise Berhad (of which 2 can't be ignored!) you should know about. 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.
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