APM Automotive Holdings Berhad (KLSE:APM) Is Paying Out A Larger Dividend Than Last Year

Yahoo

03-03-2025

APM Automotive Holdings Berhad (KLSE:APM) will increase its dividend from last year's comparable payment on the 27th of March to MYR0.18. This takes the dividend yield to 9.2%, which shareholders will be pleased with.
See our latest analysis for APM Automotive Holdings Berhad
We like to see robust dividend yields, but that doesn't matter if the payment isn't sustainable. Before making this announcement, APM Automotive Holdings Berhad was earning enough to cover the dividend, but it wasn't generating any free cash flows. No cash flows could definitely make returning cash to shareholders difficult, or at least mean the balance sheet will come under pressure.
Over the next year, EPS could expand by 25.7% if recent trends continue. If the dividend continues on this path, the payout ratio could be 49% by next year, which we think can be pretty sustainable going forward.
While the company has been paying a dividend for a long time, it has cut the dividend at least once in the last 10 years. Since 2015, the dividend has gone from MYR0.52 total annually to MYR0.28. Doing the maths, this is a decline of about 6.0% per year. 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.
Dividends have been going in the wrong direction, so we definitely want to see a different trend in the earnings per share. APM Automotive Holdings Berhad has seen EPS rising for the last five years, at 26% per annum. The company doesn't have any problems growing, despite returning a lot of capital to shareholders, which is a very nice combination for a dividend stock to have.
In summary, while it's always good to see the dividend being raised, we don't think APM Automotive Holdings Berhad's payments are rock solid. With cash flows lacking, it is difficult to see how the company can sustain a dividend payment. We would be a touch cautious of relying on this stock primarily for the dividend income.
Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. However, there are other things to consider for investors when analysing stock performance. For instance, we've picked out 1 warning sign for APM Automotive Holdings Berhad that investors should take into consideration. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.
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