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Hong Leong Financial Group Berhad (KLSE:HLFG) will increase its dividend from last year’s comparable payment on the 21st of November to MYR0.36. This takes the annual payment to 2.9% of the current stock price, which unfortunately is below what the industry is paying.
See our latest analysis for Hong Leong Financial Group Berhad
The dividend yield is a little bit low, but sustainability of the payments is also an important part of evaluating an income stock.
Hong Leong Financial Group Berhad has established itself as a dividend paying company with over 10 years history of distributing earnings to shareholders. While past records don’t necessarily translate into future results, the company’s payout ratio of 19% also shows that Hong Leong Financial Group Berhad is able to comfortably pay dividends.
Over the next 3 years, EPS is forecast to expand by 20.6%. Analysts estimate the future payout ratio will be 18% over the same time period, which is in the range that makes us comfortable with the sustainability of the dividend.
The company has a sustained record of paying dividends with very little fluctuation. The dividend has gone from an annual total of MYR0.36 in 2014 to the most recent total annual payment of MYR0.54. This means that it has been growing its distributions at 4.1% per annum over that time. Although we can’t deny that the dividend has been remarkably stable in the past, the growth has been pretty muted.
Investors could be attracted to the stock based on the quality of its payment history. We are encouraged to see that Hong Leong Financial Group Berhad has grown earnings per share at 11% per year over the past five years. Hong Leong Financial Group Berhad definitely has the potential to grow its dividend in the future with earnings on an uptrend and a low payout ratio.
Overall, a dividend increase is always good, and we think that Hong Leong Financial Group Berhad is a strong income stock thanks to its track record and growing earnings. Distributions are quite easily covered by earnings, which are also being converted to cash flows. All in all, this checks a lot of the boxes we look for when choosing an income stock.
Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. Companies that are growing earnings tend to be the best dividend stocks over the long term. See what the 4 analysts we track are forecasting for Hong Leong Financial Group Berhad for free with public analyst estimates for the company. Is Hong Leong Financial Group Berhad not quite the opportunity you were looking for? Why not check out our selection of top 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.