Bursa Malaysia Berhad (KLSE:BURSA) will trade ex-dividend in four days. The ex-dividend date is one business day before the record date, which is the date on which shareholders must be on the company’s books to be eligible for a dividend payment. The ex-dividend date is important because any transaction in a share must have been completed before the record date to be eligible for a dividend. In other words, investors can buy Bursa Malaysia Berhad shares before August 20 to be eligible for the dividend, which will be paid on August 28.
The company’s upcoming dividend is RM0.18 per share, after the company paid a total of RM0.32 per share to shareholders over the last 12 months. Looking at the last 12 months’ distributions, Bursa Malaysia Berhad has a trailing yield of about 3.4% on its current share price of RM09.45. We like when companies pay a dividend, but it’s also important to make sure that laying golden eggs doesn’t kill our golden goose! Therefore, readers should always check whether Bursa Malaysia Berhad has been able to grow its dividends, or if the dividend is at risk of being cut.
Check out our latest analysis for Bursa Malaysia Berhad
Dividends are usually paid out of company profits, so if a company pays out more than it earns, there is usually a higher risk of a dividend cut. Last year, Bursa Malaysia Berhad paid out 94% of its profits as dividends, which is above an amount we are comfortable with, especially when the company needs to reinvest in its business.
In general, the higher a company’s payout ratio, the greater the risk of a dividend cut.
Click here to see the company’s payout ratio as well as analyst estimates of its future dividends.
Have earnings and dividends increased?
Shares in companies that generate sustainable earnings growth often have the best dividend prospects, as it is easier to increase the dividend when earnings are rising. If earnings fall far enough, the company may be forced to cut its dividend. With this in mind, we are encouraged by the steady growth at Bursa Malaysia Berhad, where earnings per share have grown by an average of 4.2% over the past five years.
Another important way to gauge a company’s dividend prospects is to measure its historical dividend growth rate. Bursa Malaysia Berhad has increased its dividend by an average of 4.1% per year over the past 10 years. It’s encouraging to see the company increasing its dividends while earnings are growing, suggesting at least some interest from the company in rewarding its shareholders.
Last Takeaway
Is Bursa Malaysia Berhad worth buying for its dividend? While we like that earnings are growing a little, we’re not thrilled that they’re paying out 94% of last year’s earnings. That’s not a particularly appealing combination of attributes, and we’re just not that interested in this company’s dividend.
If you are looking at this stock without much concern about the dividend, you should still be aware of the risks associated with Bursa Malaysia Berhad. In terms of investment risks, We have identified 1 warning signal with Bursa Malaysia Berhad and understanding them should be part of your investment process.
Generally, we would not recommend simply buying the first dividend stock you see. Here is a curated list of interesting stocks with high dividend numbers.
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This Simply Wall St article is of a general nature. We comment solely on the basis of historical data and analyst forecasts, using an unbiased methodology. Our articles do not constitute financial advice. It is not a recommendation to buy or sell any stock and does not take into account your objectives or financial situation. Our goal is to provide you with long-term analysis based on fundamental data. Note that our analysis may not take into account the latest price-sensitive company announcements or qualitative materials. Simply Wall St does not hold any of the stocks mentioned.
