FM Global Logistics Holdings Berhad's (KLSE:FM) investors are due to receive a payment of MYR0.01 per share on 28th of July. Including this payment, the dividend yield on the stock will be 5.2%, which is a modest boost for shareholders' returns.

Check out our latest analysis for FM Global Logistics Holdings Berhad

FM Global Logistics Holdings Berhad's Earnings Easily Cover The Distributions

While yield is important, another factor to consider about a company's dividend is whether the current payout levels are feasible. The last dividend was quite easily covered by FM Global Logistics Holdings Berhad's earnings. This indicates that quite a large proportion of earnings is being invested back into the business.

The next year is set to see EPS grow by 18.9%. If the dividend continues on this path, the payout ratio could be 43% by next year, which we think can be pretty sustainable going forward.

Dividend Volatility

The company has a long dividend track record, but it doesn't look great with cuts in the past. The annual payment during the last 10 years was MYR0.0133 in 2013, and the most recent fiscal year payment was MYR0.03. This works out to be a compound annual growth rate (CAGR) of approximately 8.5% a year over that time. It's good to see the dividend growing at a decent rate, but the dividend has been cut at least once in the past. FM Global Logistics Holdings Berhad might have put its house in order since then, but we remain cautious.

The Dividend Looks Likely To Grow

Growing earnings per share could be a mitigating factor when considering the past fluctuations in the dividend. We are encouraged to see that FM Global Logistics Holdings Berhad has grown earnings per share at 17% per year over the past five years. The company is paying a reasonable amount of earnings to shareholders, and is growing earnings at a decent rate so we think it could be a decent dividend stock.

We Really Like FM Global Logistics Holdings Berhad's Dividend

Overall, we like to see the dividend staying consistent, and we think FM Global Logistics Holdings Berhad might even raise payments in the future. Distributions are quite easily covered by earnings, which are also being converted to cash flows. All of these factors considered, we think this has solid potential as a dividend stock.

Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. For instance, we've picked out 2 warning signs for FM Global Logistics Holdings Berhad that investors should take into consideration. If you are a dividend investor, you might also want to look at our curated list of high yield dividend stocks.

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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.

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