Asia File Corporation Bhd (KLSE:ASIAFLE) Has Announced That It Will Be Increasing Its Dividend To MYR0.035
The dividend of Asia File Corporation Bhd. (KLSE:ASIAFLE) will be higher this year compared to the payout during the same time last year. The dividend increase will bring the payment to MYR0.035 on October 26th. This will result in a dividend yield of 1.9%, which is consistent with the industry's average.
Take a look at our most recent examination of Asia File Corporation Bhd
Solid Earnings Cover For Asia File Corp
We prefer a dividend to remain steady for a long period, thus it is crucial to assess its sustainability. Thankfully, Asia File Corporation Bhd's profits effectively cover the dividend. This indicates that a major portion of the company's earnings is being reinvested to support its expansion.
EPS is projected to increase by 61.2% in the upcoming year. If the dividend follows suit, there is a possibility that the payout ratio could reach 12% by next year. This is a sustainable outlook that we believe will persist in the future.
Although the company has consistently distributed dividend payments for a significant duration, it has reduced the dividend at least once within the past decade. In 2013, the yearly payment amounted to MYR0.134, but in the most recent fiscal year, it decreased to MYR0.035. Consequently, dividend payments have experienced a substantial decline, plummeting by 74% throughout this period. Generally, we typically aim to avoid companies that consistently reduce their dividends over time.
Uncertainty In Dividend Growth
The payouts received by the shareholders have been moving in an unfavorable direction, so we are certainly hoping for a change in the trend when it comes to the earnings per share. The earnings per share have experienced a decline of 12% in the past five years. This significant drop may suggest that the company is facing difficulties, which might limit its capacity to increase the dividend amount in the coming years. It's worth noting that the earnings are expected to improve in the next year, but we shouldn't feel too at ease until this improvement becomes a consistent pattern.
Asia File Corp Bhd's Dividend: Our Perspective
Overall, this stock may not be a favorable source of income, despite the current increase in dividends. The payments have not been consistently steady, and we do not anticipate significant growth in the future. However, since the dividend is adequately supported by cash flows, it could potentially offer reliability in the short term. We would advise caution in depending solely on this stock for dividend income.
It's worth mentioning that businesses with a steady dividend policy will inspire more trust from investors than those with an unpredictable one. Nevertheless, there are additional factors that investors should take into account when studying the performance of stocks. As an illustration, we have identified one red flag concerning Asia File Corporation Bhd that investors should be aware of prior to investing in this stock. If you are someone who focuses on dividends, you may also be interested in exploring our carefully selected collection of stocks with high dividend yields.
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