This article first appeared in Capital, The Edge Malaysia Weekly on March 23, 2026 - March 29, 2026
AT first glance, a consistently high dividend payout may appear attractive, suggesting management’s alignment with shareholder interests by returning cash to investors. However, when a company distributes more than it earns — resulting in a payout ratio that exceeds 100% — the implications are more nuanced.
The dividend payout ratio measures the share of net income distributed as dividend, calculated as total dividend divided by net profit, or dividend per share (DPS) over earnings per share (EPS). A lower ratio reflects greater reinvestment, while a higher ratio may indicate either mature stability or looming sustainability risks.
Several scenarios can drive elevated ratios, including:
Asset-heavy but cash-rich business models: Companies with significant depreciation charges may report low net profit while still generating strong operating cash flow, enabling high DPS relative to EPS.
- Temporary earnings weakness: Firms facing short-term underperformance may still honour dividend commitments by drawing on accumulated cash reserves.
- Special distributions: Exceptional gains, such as one-off asset sales, may be returned to shareholders via a special dividend.
- Debt-funded payouts: Some firms borrow to sustain their dividend payout, often to reassure investors or support their share price. While this may be effective in the short term, it raises concerns about sustainability.
Across Bursa Malaysia’s ACE Market and Main Market, 184 companies — about 17.8% of all listed firms — have consistently paid cash dividends over the past decade. Among the 50 largest companies, seven paid out nearly all of their annual net profit as dividends, with an average payout ratio of more than 95% over 10 years.
Leading the pack were CelcomDigi Bhd (KL:CDB) at 105.7%, Bursa Malaysia Bhd (KL:BURSA) at 103%, TIME dotCom Bhd (KL:TIMECOM) at 102.9%, Heineken Malaysia Bhd (KL:HEIM) at 100.9%, Nestlé (Malaysia) Bhd (KL:NESTLE) at 99.1%, Maxis Bhd (KL:MAXIS) at 98% and PETRONAS Dagangan Bhd (KL:PETDAG) at 96.8%.
The telecommunications sector, viewed as a mature “cash cow”, typically reports high dividend payout ratios. Telcos’ heavy asset base means costs are spread out over the years as depreciation — a non-cash expense that reduces net profit but leaves cash intact. As a result, they often have more distributable cash than their income statements suggest.
Notably, TIME dotCom recently raised its dividend policy to a range of 50%-75% of net profit, up from 50% previously, citing confidence in its financial resilience and commitment to rewarding shareholders. The company has paid out 274% and 210% of its net profit over the past two years, largely funded by the RM2 billion in proceeds from the divestment of a significant stake in data centre business AIMS Group to DigitalBridge in 2023.
Consumer giants Heineken and Nestlé sustain their high dividend payout ratios by leveraging favourable supplier terms that allow them to collect cash from sales well before payments are due. PETRONAS Dagangan enjoys similar liquidity advantages, benefiting from rapid cash inflows and high-volume turnover of essential goods.
Meanwhile, Bursa Malaysia’s elevated dividend payout ratio reflects its excess cash distributions in 2017/18. As an asset-light exchange operator with minimal capital expenditure needs, it maintained its dividend payout ratio above 90%, well above its formal policy floor of 75%.
Shifting dividend trends
Interestingly, several companies have seen their dividend payout ratios rise in recent years. Most notably, Mr DIY Group (M) Bhd (KL:MRDIY) lifted its dividend payout ratio to 120% from about 40%. The retailer holds RM225.21 million in cash against borrowings of RM104.35 million and has announced plans for a RM5 billion sukuk programme to support its working capital needs. Aided by the rapid cash turnover, its retail model enables efficient cash optimisation and supports elevated dividend payouts.
Banks also stand out in this rising distribution trend. RHB Bank Bhd (KL:RHBBANK) raised its dividend payout ratio to 60% from 30%, Public Bank Bhd (KL:PBBANK) increased it to 60% from about 45% and CIMB Group Holdings Bhd (KL:CIMB) to 65% from 50%. These moves reflect their stronger capital position and being able to balance between reinvestment needs and shareholder returns.
Similarly, KPJ Healthcare Bhd (KL:KPJ), buoyed by its earnings growth, raised its dividend payout ratio to 50% from about 35%, signalling confidence in its expanding healthcare footprint.
Several companies have gone in the opposite direction. Chin Hin Group Bhd (KL:CHINHIN) halted its dividend payout in the past three years despite revenue growing to RM4.1 billion from RM2.1 billion. Its net profit, however, declined from RM150 million to RM104 million, suggesting that cash is being allocated to capital-intensive property developments.
Utility player YTL Power International Bhd (KL:YTLPOWR) also scaled back its cash distributions. Despite a sharp increase in profits from the improved gas tariffs in Singapore in FY2023 and FY2024, its dividend payout ratio fell to 25% — well below the previous 60%-75% range — as funds were channelled to its ongoing data centre project.
Malayan Cement Bhd (KL:MCEMENT), despite the favourable operating conditions and rising net profit, has not been generous with dividends. Its payout ratio dropped to 24% in FY2025 from about 50% in FY2023, reflecting a preference for reinvestment over cash distribution.
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