AMMB Holdings Berhad (KLSE:AMBANK) will pay a dividend of MYR0.06 on the 8th of January. This means the dividend yield will be fairly typical at 4.5%.

See our latest analysis for AMMB Holdings Berhad

AMMB Holdings Berhad's Payment Expected To Have Solid Earnings Coverage

Unless the payments are sustainable, the dividend yield doesn't mean too much.

Having distributed dividends for at least 10 years, AMMB Holdings Berhad has a long history of paying out a part of its earnings to shareholders. Past distributions do not necessarily guarantee future ones, but AMMB Holdings Berhad's payout ratio of 36% is a good sign as this means that earnings decently cover dividends.

The next 3 years are set to see EPS grow by 9.6%. The future payout ratio could be 42% over that time period, according to analyst estimates, which is a good look for the future of the dividend.

Dividend Volatility

The company's dividend history has been marked by instability, with at least one cut in the last 10 years. Since 2013, the dividend has gone from MYR0.22 total annually to MYR0.183. This works out to be a decline of approximately 1.8% 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.

We Could See AMMB Holdings Berhad's Dividend Growing

Growing earnings per share could be a mitigating factor when considering the past fluctuations in the dividend. AMMB Holdings Berhad has seen EPS rising for the last five years, at 5.7% per annum. Growth in EPS bodes well for the dividend, as does the low payout ratio that the company is currently reporting.

In Summary

In summary, we are pleased with the dividend remaining consistent, and we think there is a good chance of this continuing in the future. While the payout ratios are a good sign, we are less enthusiastic about the company's dividend record. Taking all of this into consideration, the dividend looks viable moving forward, but investors should be mindful that the company has pushed the boundaries of sustainability in the past and may do so again.

Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. For instance, we've picked out 1 warning sign for AMMB Holdings Berhad that investors should take into consideration. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.

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.