Yahoo Finance Chin Teck Plantations Berhad (KLSE:CHINTEK) Stock Goes Ex-Dividend In Just Three Days
Regular readers will know that we love our dividends at Simply Wall St, which is why it's exciting to see Chin Teck Plantations Berhad (KLSE:CHINTEK) is about to trade ex-dividend in the next 3 days. Typically, the ex-dividend date is one business day before the record date which is the date on which a company determines the shareholders eligible to receive a 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 Chin Teck Plantations Berhad's shares on or after the 18th of January will not receive the dividend, which will be paid on the 31st of January.
The company's next dividend payment will be RM0.12 per share, and in the last 12 months, the company paid a total of RM0.20 per share. Based on the last year's worth of payments, Chin Teck Plantations Berhad stock has a trailing yield of around 2.6% on the current share price of MYR7.58. If you buy this business for its dividend, you should have an idea of whether Chin Teck Plantations Berhad's dividend is reliable and sustainable. So we need to investigate whether Chin Teck Plantations Berhad can afford its dividend, and if the dividend could grow.
See our latest analysis for Chin Teck Plantations Berhad
Dividends are typically paid from company earnings. If a company pays more in dividends than it earned in profit, then the dividend could be unsustainable. Chin Teck Plantations Berhad paid out a comfortable 27% of its profit last year. A useful secondary check can be to evaluate whether Chin Teck Plantations Berhad generated enough free cash flow to afford its dividend. It distributed 44% of its free cash flow as dividends, a comfortable payout level for most companies.
It's positive to see that Chin Teck Plantations Berhad'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.
Click here to see the company's payout ratio, plus analyst estimates of its future dividends.
Have Earnings And Dividends Been Growing?
When earnings decline, dividend companies become much harder to analyse and own safely. If earnings fall far enough, the company could be forced to cut its dividend. Chin Teck Plantations Berhad's earnings per share have fallen at approximately 5.7% a year over the previous five years. Such a sharp decline casts doubt on the future sustainability of the dividend.
Many investors will assess a company's dividend performance by evaluating how much the dividend payments have changed over time. Chin Teck Plantations Berhad has seen its dividend decline 2.6% per annum on average over the past 10 years, which is not great to see. While it's not great that earnings and dividends per share have fallen in recent years, we're encouraged by the fact that management has trimmed the dividend rather than risk over-committing the company in a risky attempt to maintain yields to shareholders.
Final Takeaway
Is Chin Teck Plantations Berhad an attractive dividend stock, or better left on the shelf? Chin Teck Plantations Berhad has comfortably low cash and profit payout ratios, which may mean the dividend is sustainable even in the face of a sharp decline in earnings per share. Still, we consider declining earnings to be a warning sign. To summarise, Chin Teck Plantations Berhad looks okay on this analysis, although it doesn't appear a stand-out opportunity.
With that in mind, a critical part of thorough stock research is being aware of any risks that stock currently faces. In terms of investment risks, we've identified 2 warning signs with Chin Teck Plantations Berhad and understanding them should be part of your investment process.
If you're in the market for strong dividend payers, we recommend checking our selection of top 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.
