Mr D.I.Y. Group (M) Berhad (KLSE:MRDIY) will pay a dividend of MYR0.01 on the 21st of June. The dividend yield is 1.8% based on this payment, which is a little bit low compared to the other companies in the industry.
View our latest analysis for Mr D.I.Y. Group (M) Berhad
Mr D.I.Y. Group (M) Berhad's Dividend Is Well Covered By Earnings
While yield is important, another factor to consider about a company's dividend is whether the current payout levels are feasible. Prior to this announcement, Mr D.I.Y. Group (M) Berhad's dividend was comfortably covered by both cash flow and earnings. This means that a large portion of its earnings are being retained to grow the business.
The next year is set to see EPS grow by 36.1%. If the dividend continues along recent trends, we estimate the payout ratio will be 22%, which is in the range that makes us comfortable with the sustainability of the dividend.
Mr D.I.Y. Group (M) Berhad's Dividend Has Lacked Consistency
The track record isn't the longest, but we are already seeing a bit of instability in the payments. The dividend has gone from an annual total of MYR0.0195 in 2020 to the most recent total annual payment of MYR0.032. This works out to be a compound annual growth rate (CAGR) of approximately 13% a year over that time. Mr D.I.Y. Group (M) Berhad has grown distributions at a rapid rate despite cutting the dividend at least once in the past. Companies that cut once often cut again, so we would be cautious about buying this stock solely for the dividend income.
The Dividend Has Limited Growth Potential
Growing earnings per share could be a mitigating factor when considering the past fluctuations in the dividend. Mr D.I.Y. Group (M) Berhad's earnings per share has shrunk at 80% a year over the past five years. A sharp decline in earnings per share is not great from from a dividend perspective. Even conservative payout ratios can come under pressure if earnings fall far enough. It's not all bad news though, as the earnings are predicted to rise over the next 12 months - we would just be a bit cautious until this becomes a long term trend.
Our Thoughts On Mr D.I.Y. Group (M) Berhad's Dividend
Overall, it's nice to see a consistent dividend payment, but we think that longer term, the current level of payment might be unsustainable. In the past, the payments have been unstable, but over the short term the dividend could be reliable, with the company generating enough cash to cover it. We would be a touch cautious of relying on this stock primarily for the dividend income.