Mr D.I.Y. Group (M) Berhad: Is This High-Yield Retail Stock a Buy Before Its Upcoming Dividend?

When it comes to dividend investing, few stories blend income potential with strategic growth as compellingly as Mr D.I.Y. Group (M) Berhad (KLSE: MRDIY). With a current dividend yield of 3.92% as of August 21, 2025, and a forward yield of 3.86%, this Malaysian retail giant is positioning itself as a must-watch for income-focused investors. But is this high-yield stock a buy before its upcoming ex-dividend date on August 28, 2025? Let's break it down.

A Retail Powerhouse with a Disciplined Payout Policy

Mr D.I.Y. Group dominates Malaysia's home improvement and discount retail sector, operating over 1,300 stores under brands like MR.D.I.Y., MR.DOLLAR, and MR.TOY. Its expansion into underpenetrated markets—such as East Malaysia and the East Coast of Peninsular Malaysia—positions it to capitalize on the country's robust economic tailwinds. Malaysia's 2025 GDP growth forecast of 4.6% and private consumption growth of 5.7% are fueling demand for discretionary retail, a sector where Mr D.I.Y. excels.

What makes this stock particularly attractive is its quarterly dividend consistency. Despite a recent dip in the payout (RM0.015 per share for the upcoming ex-dividend date), the company has maintained a payout ratio of 85–90% of earnings, ensuring dividends remain well-supported by profitability. Free cash flow coverage of 41–55% further underpins the sustainability of these payouts, even as the company funds aggressive store expansions.

Shareholder Alignment: A Recipe for Long-Term Success

One of Mr D.I.Y.'s strongest suits is its shareholder alignment. Private companies, led by Bee Family Limited (50.9% stake), hold a controlling interest, ensuring strategic decisions prioritize long-term value creation. This alignment is reinforced by insider ownership: CEO Chu Ong holds 0.5% of shares, while insiders collectively own RM2.3 billion in the RM16 billion business. Such alignment reduces the risk of short-termism and aligns leadership with public shareholders.

Institutional investors, including Malaysia's Employee Provident Fund (7.53% stake), add credibility to the ownership structure. With 22% institutional ownership and 14% held by retail investors, the company balances private control with broad-based support. Analysts back this model, with 11 “buy” and four “hold” ratings currently in play.

Risks to Consider: High Payouts and Margin Pressures

No investment is without risks. Mr D.I.Y.'s high payout ratio (90% in 2024) leaves little room for reinvestment during economic downturns. While free cash flow coverage is healthier, a slowdown in consumer spending or rising costs could strain the dividend. Additionally, the recent 7.14% drop in the dividend from RM0.018 to RM0.015 per share raises questions about future growth potential.

However, the company's 31.7% return on equity (ROE) and 45.5% gross margin suggest strong operational efficiency. Its strategic partnership with KKV, a trendy lifestyle brand, also diversifies revenue streams and attracts younger demographics. These factors mitigate some of the risks associated with high payouts.

The Dividend Capture Strategy: Timing Is Everything

For income-focused investors, the upcoming ex-dividend date on August 28, 2025 is a key event. To qualify for the RM0.015 per share payout on September 8, investors must purchase shares before this date. Given the stock's current price of RM1.53 and a forward yield of 3.92%, this represents a compelling opportunity.

Historically, the stock has shown minimal price drop-offs post-ex-dividend, making it a favorable candidate for dividend capture strategies. Investors should also monitor the company's 4Q 2024 earnings, scheduled for February 27, 2025, to gauge momentum ahead of the next payout cycle.

Final Verdict: A Buy for Income and Growth

Mr D.I.Y. Group (M) Berhad checks all the boxes for a high-yield dividend stock: strong market leadership, disciplined payout policies, and robust shareholder alignment. While the recent dip in the dividend raises eyebrows, the company's expansion plans, favorable macroeconomic conditions, and healthy cash flow metrics suggest the payout remains sustainable.

For investors seeking a blend of income and growth, buying before the August 28 ex-dividend date makes sense. The stock's 3.92% yield, combined with its strategic positioning in Malaysia's booming retail sector, offers a compelling case for inclusion in a diversified portfolio. Just be mindful of the high payout ratio and keep an eye on consumer spending trends in 2025.

In a market where high-quality dividend stocks are scarce, Mr D.I.Y. Group stands out as a rare gem. Whether you're a long-term holder or a tactical dividend hunter, this is a stock to watch—and potentially own—before the next payout cycle.