Assessing the Upcoming Dividend and Financial Health of Nestle Malaysia Bhd (NSLYF, Financial)
Nestle Malaysia Bhd (NSLYF) recently announced a dividend of $0.7 per share, payable on 2023-12-14, with the ex-dividend date set for 2023-11-17. 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 Nestle Malaysia Bhd's dividend performance and assess its sustainability.
What Does Nestle Malaysia Bhd Do?
Nestle Malaysia Bhd is a Malaysian investment holding company owned by Nestle. The business activities of the group are functioned through Food and beverages and Others segments. The products offered by the group are related to dairy, beverages, food, Nestle Professional, Nestle Ice Cream, confectionery, chilled dairy, infant nutrition, and health science. The main geography is the domestic market, representing approximately 80% of total sales. The most well-known brands are Nescafe, Maggi, Nespray, Kit Kat, and Milo.
A Glimpse at Nestle Malaysia Bhd's Dividend History
Nestle Malaysia Bhd has maintained a consistent dividend payment record since 2011. Dividends are currently distributed on a quarterly basis. Below is a chart showing annual Dividends Per Share for tracking historical trends.
Breaking Down Nestle Malaysia Bhd's Dividend Yield and Growth
As of today, Nestle Malaysia Bhd currently has a 12-month trailing dividend yield of 2.18% and a 12-month forward dividend yield of 2.20%. This suggests an expectation of increased dividend payments over the next 12 months. Over the past three years, Nestle Malaysia Bhd's annual dividend growth rate was -4.70%. Extended to a five-year horizon, this rate increased to -3.00% per year. And over the past decade, Nestle Malaysia Bhd's annual dividends per share growth rate stands at 2.10%.
Based on Nestle Malaysia Bhd's dividend yield and five-year growth rate, the 5-year yield on cost of Nestle Malaysia Bhd stock as of today is approximately 1.87%.
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 2023-09-30, Nestle Malaysia Bhd's dividend payout ratio is 0.95, which may suggest that the company's dividend may not be sustainable.
Nestle Malaysia Bhd's profitability rank, offers an understanding of the company's earnings prowess relative to its peers. GuruFocus ranks Nestle Malaysia Bhd's profitability 8 out of 10 as of 2023-09-30, suggesting good profitability prospects. The company has reported positive net income for each of 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. Nestle Malaysia Bhd's growth rank of 8 out of 10 suggests that the company's growth trajectory is good relative to its competitors. Nestle Malaysia Bhd's revenue has increased by approximately 6.50% per year on average, a rate that underperforms than approximately 50.06% 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, Nestle Malaysia Bhd's earnings increased by approximately -2.50% per year on average, a rate that underperforms than approximately 61.7% of global competitors. Lastly, the company's 5-year EBITDA growth rate of -2.30%, which underperforms than approximately 68.35% of global competitors.
Next Steps
Considering Nestle Malaysia Bhd's history of consistent dividend payments, its current yield, and the five-year growth rate, value investors might find the stock an attractive option for income. However, the negative dividend growth rate over the last three years and the high payout ratio raise concerns about the sustainability of future dividends. Investors should weigh the company's solid profitability against the mixed growth metrics in their decision-making process. For those seeking additional investment opportunities, 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.
