Amway (Malaysia) Holdings Berhad (KLSE:AMWAY) Has Announced A Dividend Of MYR0.05

Amway (Malaysia) Holdings Berhad’s (KLSE:AMWAY) investors are due to receive a payment of MYR0.05 per share on 15th of December. This means the annual payment is 6.8% of the current stock price, which is above the average for the industry.

View our latest analysis for Amway (Malaysia) Holdings Berhad

Amway (Malaysia) Holdings Berhad’s Earnings Easily Cover The Distributions

A big dividend yield for a few years doesn’t mean much if it can’t be sustained. Before making this announcement, Amway (Malaysia) Holdings Berhad was easily earning enough to cover the dividend. As a result, a large proportion of what it earned was being reinvested back into the business.

EPS is set to fall by 10.2% over the next 12 months. If the dividend continues along recent trends, we estimate the payout ratio could be 59%, which we consider to be quite comfortable, with most of the company’s earnings left over to grow the business in the future.

Dividend Volatility

Although the company has a long dividend history, it has been cut at least once in the last 10 years. Since 2013, the annual payment back then was MYR0.625, compared to the most recent full-year payment of MYR0.38. This works out to be a decline of approximately 4.9% per year over that time. Generally, we don’t like to see a dividend that has been declining over time as this can degrade shareholders’ returns and indicate that the company may be running into problems.

The Dividend Looks Likely To Grow

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. It’s encouraging to see that Amway (Malaysia) Holdings Berhad has been growing its earnings per share at 18% a year over the past five years. Amway (Malaysia) Holdings Berhad definitely has the potential to grow its dividend in the future with earnings on an uptrend and a low payout ratio.

We Really Like Amway (Malaysia) Holdings Berhad’s Dividend

Overall, we think that this is a great income investment, and we think that maintaining the dividend this year may have been a conservative choice. The company is generating plenty of cash, and the earnings also quite easily cover the distributions. However, it is worth noting that the earnings are expected to fall over the next year, which may not change the long term outlook, but could affect the dividend payment in the next 12 months. Taking this all into consideration, this looks like it could be a good dividend opportunity.

Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. 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 2 warning signs for Amway (Malaysia) Holdings Berhad (of which 1 is a bit concerning!) you should know about. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.

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