Read This Before Considering Dayang Enterprise Holdings Bhd (KLSE:DAYANG) For Its Upcoming RM00.07 Dividend
Dayang Enterprise Holdings Bhd (KLSE:DAYANG) is about to trade ex-dividend in the next 4 days. The ex-dividend date is usually set to be two business days before the record date, which is the cut-off date on which you must be present on the company's books as a shareholder in order to receive the dividend. It is important to be aware of the ex-dividend date because any trade on the stock needs to have been settled on or before the record date. This means that investors who purchase Dayang Enterprise Holdings Bhd's shares on or after the 8th of September will not receive the dividend, which will be paid on the 23rd of September.
The company's next dividend payment will be RM00.07 per share, on the back of last year when the company paid a total of RM0.14 to shareholders. Based on the last year's worth of payments, Dayang Enterprise Holdings Bhd stock has a trailing yield of around 8.0% on the current share price of RM01.74. We love seeing companies pay a dividend, but it's also important to be sure that laying the golden eggs isn't going to kill our golden goose! As a result, readers should always check whether Dayang Enterprise Holdings Bhd has been able to grow its dividends, or if the dividend might be cut.
Dividends are usually paid out of company profits, so if a company pays out more than it earned then its dividend is usually at greater risk of being cut. Dayang Enterprise Holdings Bhd paid out 67% of its earnings to investors last year, a normal payout level for most businesses. A useful secondary check can be to evaluate whether Dayang Enterprise Holdings Bhd generated enough free cash flow to afford its dividend. It distributed 26% of its free cash flow as dividends, a comfortable payout level for most companies.
It's positive to see that Dayang Enterprise Holdings Bhd's dividend is covered by both profits and cash flow, since this is generally a sign that the dividend is sustainable, and a lower payout ratio usually suggests a greater margin of safety before the dividend gets cut.
Check out our latest analysis for Dayang Enterprise Holdings Bhd
Click here to see the company's payout ratio, plus analyst estimates of its future dividends.
Have Earnings And Dividends Been Growing?
Companies with falling earnings are riskier for dividend shareholders. If business enters a downturn and the dividend is cut, the company could see its value fall precipitously. So we're not too excited that Dayang Enterprise Holdings Bhd's earnings are down 2.7% a year over the past five years.
The main way most investors will assess a company's dividend prospects is by checking the historical rate of dividend growth. In the last 10 years, Dayang Enterprise Holdings Bhd has lifted its dividend by approximately 7.2% a year on average. That's interesting, but the combination of a growing dividend despite declining earnings can typically only be achieved by paying out more of the company's profits. This can be valuable for shareholders, but it can't go on forever.
The Bottom Line
Should investors buy Dayang Enterprise Holdings Bhd for the upcoming dividend? We're not enthused by the declining earnings per share, although at least the company's payout ratio is within a reasonable range, meaning it may not be at imminent risk of a dividend cut. All things considered, we are not particularly enthused about Dayang Enterprise Holdings Bhd from a dividend perspective.
If you want to look further into Dayang Enterprise Holdings Bhd, it's worth knowing the risks this business faces. For example - Dayang Enterprise Holdings Bhd has 1 warning sign we think you should be aware of.
A common investing mistake is buying the first interesting stock you see. Here you can find a full list of high-yield dividend stocks.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.