Petronas Gas Bhd's Dividend Analysis

GuruFocus Research

Thu, Jun 13, 2024, 5:04 AM 4 min read

Exploring the Sustainability and Growth of Dividends at Petronas Gas Bhd

Petronas Gas Bhd (PNAGF) recently announced a dividend of $0.16 per share, payable on 2024-06-27, with the ex-dividend date set for 2024-06-13. As investors look forward to this upcoming payment, the spotlight also shines on the company's dividend history, yield, and growth rates. Using the data from GuruFocus, let's look into Petronas Gas Bhd's dividend performance and assess its sustainability.

What Does Petronas Gas Bhd Do?

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Petronas Gas Bhd is a Malaysian gas infrastructure and utilities company of which Malaysia's nationalized oil corporation, PETRONAS, holds a majority interest. Petronas Gas segments its primary operations into Gas Processing, Gas Transportation, Utilities, and Regasification businesses. While each of these contributes significantly to the company's total revenue, its Utilities and Gas Processing units combine to generate the majority. In Gas Processing, Petronas Gas receives processing fees under multi-year contracts by processing natural gas piped offshore for its parent company, PETRONAS. The Gas Transportation business encompasses the transmission of offshore natural gas through pipelines to customers in Malaysia and Singapore under multi-year agreements with PETRONAS.

A Glimpse at Petronas Gas Bhd's Dividend History

Petronas Gas Bhd has maintained a consistent dividend payment record since 2018. Dividends are currently distributed on a quarterly basis. Below is a chart showing annual Dividends Per Share for tracking historical trends.

Breaking Down Petronas Gas Bhd's Dividend Yield and Growth

As of today, Petronas Gas Bhd currently has a 12-month trailing dividend yield of 3.96% and a 12-month forward dividend yield of 3.94%. This suggests an expectation of stable dividend payments over the next 12 months. Extended to a five-year horizon, this rate increased to 0.60% per year. And over the past decade, Petronas Gas Bhd's annual dividends per share growth rate stands at 2.30%.

Based on Petronas Gas Bhd's dividend yield and five-year growth rate, the 5-year yield on cost of Petronas Gas Bhd stock as of today is approximately 4.08%.

The Sustainability Question: Payout Ratio and Profitability

To assess the sustainability of the dividend, one needs to evaluate the company's payout ratio. The dividend payout ratio provides insights into the portion of earnings the company distributes as dividends. A lower ratio suggests that the company retains a significant part of its earnings, thereby ensuring the availability of funds for future growth and unexpected downturns. As of 2024-03-31, Petronas Gas Bhd's dividend payout ratio is 0.77, indicating a balanced approach to distributing earnings and retaining profits for future investments.

Petronas Gas Bhd's profitability rank, offers an understanding of the company's earnings prowess relative to its peers. GuruFocus ranks Petronas Gas Bhd's profitability 8 out of 10 as of 2024-03-31, suggesting good profitability prospects. The company has reported positive net income for each year over the past decade, further solidifying its high profitability.

Growth Metrics: The Future Outlook

To ensure the sustainability of dividends, a company must have robust growth metrics. Petronas Gas Bhd's growth rank of 8 out of 10 suggests that the company's growth trajectory is good relative to its competitors. Revenue is the lifeblood of any company, and Petronas Gas Bhd's revenue per share, combined with the 3-year revenue growth rate, indicates a strong revenue model. Petronas Gas Bhd's revenue has increased by approximately 4.80% per year on average, a rate that underperforms approximately 67.54% of global competitors. The company's 3-year EPS growth rate showcases its capability to grow its earnings, a critical component for sustaining dividends in the long run. During the past three years, Petronas Gas Bhd's earnings increased by approximately -3.30% per year on average, a rate that underperforms approximately 70.6% of global competitors. Lastly, the company's 5-year EBITDA growth rate of -1.20%, which underperforms approximately 70.06% of global competitors.

Conclusion

The analysis of Petronas Gas Bhd's dividend payments, growth rates, payout ratio, profitability, and growth metrics presents a mixed picture. While the company shows strong profitability and a reasonable payout ratio, its growth metrics indicate challenges ahead. Investors should weigh these factors carefully when considering the sustainability of future dividends. For those interested in exploring further, GuruFocus Premium users can screen for high-dividend yield stocks using the High Dividend Yield Screener.

This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circumstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein.

This article first appeared on GuruFocus.

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