Investing in dividend-paying stocks in Malaysia is a great way to build long-term wealth. The dividend stock that you own for every share you paid is a portion of the company’s earnings. However, it’s easy to get caught up in the search for a big yield of what makes a great dividend investment.

Many people invest in dividend stocks to take advantage of the steady income and the opportunity of reinvesting this dividend to purchase an additional share of stocks.

Since the dividends are paid only by financially stable companies, investors find it easy to invest and enjoy the periodic dividends payments- a success win for investors.

Up until this point, it may seem like a straightforward system of finding an organization that pays dividends and reinvesting those dividends throughout the years so as to fabricate your total assets. 


It isn’t as easy as it seems to be. You have to be confident enough about finding quality dividend stock in Bursa Malaysia market.

So, how do you pick up the best dividend stocks?

Here, we are providing you with the simple steps to find the best dividend stocks this year. 

7 Steps To Find Dividend Stocks Bursa Malaysia

1. Company Dividend History

To find dividend stock, first, investors should always look at the company’s dividend-paying history. Being a potential KLSE stock trader you should look for at least 10 years of the company’s dividend history. Always consider a company that has a long history of increasing its dividend, which shows a management commitment of returning value to shareholders over time.

You should adjust the number of consecutive annual increases to your choice. For example, some investors will only consider companies that have increased their dividends for 25 years or more. But you might be flexible here. For example, Nestlé Malaysia has paid an increasing dividend per share for the last 14 years. It’s dividends increase from RM0.821 per share to RM2.35 in 2013. This implies that dividend has grown up, on average, 8.4% a year in the last 13 years. 

2. The Company’s Payout Ratio

The company’s payout ratio is a very useful metric for evaluating a dividend-paying stock. The calculation is simple enough: It’s the proportion of a company’s earnings paid out as dividends.
The dividend we consider “healthy” with lower payout ratio, in other words, there is a margin of safety that would allow a company to miss its earnings target and pay out its dividend, and there may also be a place for management to increase the dividend over time. 
An extremely high payout proportion can be an indication to research further, however, it’s not really a flag to run shouting. As discussed, consumer staples, utilities, and telecoms tend to generate very steady revenues and cash flows. 

When coming to a company’s payout ratio it should be not more than 80% of its earning per share. If a company earns $0.50/share and is paying a dividend of $0.75/share, it could be in trouble. It is most important to differentiate the earnings per share and the dividends per share. During the past 13 years, the highest Dividend Payout Ratio of Bursa Malaysia Bhd was 2.18. The lowest was 0.00. And the median was 0.90.

3. Low Capital Expenditure

Picking up the company with low capital expenditure is one of the prominent ways to find a dividend stock. On the off chance, if you are a profit speculator, you ought to incline toward the low CAPEX organization. A high CAPEX organization will utilize the capital for its administration. A low CAPEX organization will disperse the money and benefit to its investors. 
The innovative organizations, electrical organizations or assembling organizations, they all have high capital consumption as they need to keep up the cutting-edge innovation and they require for consistent updates in the generation to continue in this market. 
Henceforth, study for an organization that is ready to keep up its business with the least capital use. 

The organization has a steady free income will probably pay the profit to its investors.

4. Loads Of Cash

A company of dividend-paying should have lots of cash. The best profit stocks will highlight abundant measures of money, which clearly bolsters the payout cause. Besides, anything can occur in the business sectors, particularly at this point. Having a money channel empowers firms to pay their investors, notwithstanding when the going is unpleasant. 
Furthermore, a money rich association permits the executives with more noteworthy adaptability for future undertakings.

To Check the company’s current ratio, which calculates its potential to meet short-term obligations. The “current ratio” is the ratio of current assets to current liabilities. If a company’s current ratio is greater than 1, it’s in a good state.

5. Stocks Price Stability & Different Sectors

Stock price stability is one of the important factors in choosing dividend stocks. Investors need to continuously remind themselves that no matter how big or stable a company, it’s stock price can still fall. The stock prices of many big, dividend-paying companies fall in the 2008 crash. However, they experienced less vandalism than the total market, and they recovered more rapidly.
Some of the other better dividend yields are in sectors that experience more volatility. A sensible investor will diversify his dividend-paying stocks among different sectors to reduce the overall impact of market swings.


6. Dividend Yield Percentage

The dividend yield percentage is one of the main factors to consider when investing in dividend-paying stocks in Malaysia. The dividend yield is the proportion of the yearly profit contrasted with the present offer cost and is communicated as a rate. Since the dividend itself is changed inconsistently, the dividend yield will rise when the offer value falls and decrease when the offer value rises. 
Some stock parts, similar to customer non-patterned or utilities, will pay a higher-than-normal profit. Little, more up to date organizations that are as yet developing rapidly pay a lower normal profit than develop organizations in similar parts.

There are many good dividend-paying stocks out there, but investors should factor in the price of any companies paying dividend yield at least 3%.

7. Business That Generate Good ROE

ROE is the return a business make using the capital they have. Similar to how your savings account give you interest. Generally you will prefer a business than can generate >15% of ROE. High ROE and long consistency normally means dividend will grow over time.

MMF Takeaways

There are a lot more tips to pick the best profit stocks in Bursa Malaysia. For example, don’t put resources into the organization with obligation, regardless of whether the organization has a great profit record and so on.
Being a profit speculator, you generally watch out for all the above elements that we have referenced to pick the best Dividend stocks. Dividend stocks are the one that keeps stock dealer on the financial exchange and they are the dynamic wellsprings of the pay.
If you are interested in more stocks information including KLSE stock tips and stock trading strategies, news and updates then click the Contact Us button below and join the team of experts in Bursa Malaysia stock trading. 

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