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12/16 17:22
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Dividend Payment: Dominant Enterprise Berhad (KLSE:DOMINAN) will pay a dividend of MYR0.01 per share on September 24, representing a 5.1% yield based on the current stock price, aligning with industry averages.
Sustainability Concerns: While the company earned enough to cover the dividend, its free cash flows were negative, raising concerns about the sustainability of future payments. Cash flow is deemed more critical than earnings for assessing dividend reliability.
Earnings Projections: Earnings per share are expected to increase by 28.5% over the next year, potentially leading to a payout ratio of 19%, which could be sustainable if the trend continues.
Dividend History: The company has a history of dividend instability, with at least one cut in the past decade. Since 2015, the annual dividend has grown from MYR0.0333 to MYR0.04, reflecting a modest growth rate of 1.9% per annum.
Earnings Growth: Dominant Enterprise Berhad has achieved a significant earnings per share growth of 28% annually over the past five years, indicating effective reinvestment in the business.
Investment Caution: Despite the lack of recent dividend cuts, there are concerns regarding the sustainability of future payments due to inconsistent cash flows. The company may not be an ideal choice for income-focused investors.
Investor Interest: Companies with stable dividend policies tend to attract more investor interest compared to those with inconsistent dividends.
Warning Signs: There are three warning signs identified for Dominant Enterprise Berhad, with one being particularly concerning, suggesting potential risks for investors.
Alternative Options: Investors are encouraged to explore a selection of top dividend stocks as alternatives to Dominant Enterprise Berhad.
