Carlsberg Brewery Malaysia Berhad (KLSE:CARLSBG) Will Pay A Smaller Dividend Than Last Year
Carlsberg Brewery Malaysia Berhad (KLSE:CARLSBG) has announced that on 18th of May, it will be paying a dividend ofMYR0.25, which a reduction from last year's comparable dividend. The dividend yield will be in the average range for the industry at 4.2%.
Check out our latest analysis for Carlsberg Brewery Malaysia Berhad
Carlsberg Brewery Malaysia Berhad's Earnings Easily Cover The Distributions
While it is always good to see a solid dividend yield, we should also consider whether the payment is feasible. At the time of the last dividend payment, Carlsberg Brewery Malaysia Berhad was paying out a very large proportion of what it was earning and 101% of cash flows. Paying out such a high proportion of cash flows can expose the business to needing to cut the dividend if the business runs into some challenges.
Over the next year, EPS is forecast to expand by 22.1%. Under the assumption that the dividend will continue along recent trends, we think the payout ratio could be 68% which would be quite comfortable going to take the dividend forward.
The company has a long dividend track record, but it doesn't look great with cuts in the past. Since 2013, the annual payment back then was MYR0.725, compared to the most recent full-year payment of MYR0.88. This means that it has been growing its distributions at 2.0% per annum over that time. The dividend has seen some fluctuations in the past, so even though the dividend was raised this year, we should remember that it has been cut in the past.
We Could See Carlsberg Brewery Malaysia Berhad's Dividend Growing
Given that the dividend has been cut in the past, we need to check if earnings are growing and if that might lead to stronger dividends in the future. Carlsberg Brewery Malaysia Berhad has impressed us by growing EPS at 7.5% per year over the past five years. EPS has been growing at a reasonable rate, although with most of the profits being paid out to shareholders, growth prospects could be more limited in the future.
Carlsberg Brewery Malaysia Berhad's Dividend Doesn't Look Sustainable
In summary, dividends being cut isn't ideal, however it can bring the payment into a more sustainable range. The track record isn't great, and the payments are a bit high to be considered sustainable. We don't think Carlsberg Brewery Malaysia Berhad is a great stock to add to your portfolio if income is your focus.
Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. To that end, Carlsberg Brewery Malaysia Berhad has 2 warning signs (and 1 which is potentially serious) we think you should know about. Is Carlsberg Brewery Malaysia Berhad not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
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.
Join A Paid User Research Session
You’ll receive a US$30 Amazon Gift card for 1 hour of your time while helping us build better investing tools for the individual investors like yourself. Sign up here