Q & ACategory: StocksSustainable Dividend Payout Ratio?
Yeap Yiu Lern asked 9 months ago

Hi KC,
I recently came across one of the Q1 corporate results from Taliwork. From what I understand from the attached report in Bursa, their quarterly dividend is RM0.0165 whereby their Q1 EPS is only RM0.005. My question here is the current dividend payout ratio of over 100% sustainable? From previous track record, this company does pay dividends consistently on a quarterly basis.
You may view their latest quarterly report via the link given below.
https://www.bursamalaysia.com/market_information/announcements/company_announcement/announcement_details?ann_id=3353627 
 

1 Answers
KCLau Staff answered 9 months ago

Hi Alex, good observation.
The company has been paying dividend more than its earnings for the past few years.
That’s definitely not sustainable. I would avoid it.

Hi KC,
On normal occasion, I would agree with you but since this is sort of utilities company with holdings in water & waste treatment plants and toll highways, is there any chance that their EPS is ‘artificially lowered’ by depreciation costs from their PPE? I tried looking for this in their annual reports but unable to discern the cause.

KCLau  Staff replied 9 months ago

They have cash and it has been depleted slowly through the dividend payout that is more than earning for the past few years. Most likely when the cash is insignificant, the dividend will reduce to match the actual earning.
You can observe its cash flow over the past years.