Yahoo Finance Just Three Days Till AME Elite Consortium Berhad (KLSE:AME) Will Be Trading Ex-Dividend
AME Elite Consortium Berhad (KLSE:AME) is about to trade ex-dividend in the next three 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. The ex-dividend date is important as the process of settlement involves two full business days. So if you miss that date, you would not show up on the company's books on the record date. In other words, investors can purchase AME Elite Consortium Berhad's shares before the 20th of June in order to be eligible for the dividend, which will be paid on the 12th of July.
The company's next dividend payment will be RM00.04 per share, and in the last 12 months, the company paid a total of RM0.02 per share. Based on the last year's worth of payments, AME Elite Consortium Berhad has a trailing yield of 3.5% on the current stock price of RM01.71. If you buy this business for its dividend, you should have an idea of whether AME Elite Consortium Berhad's dividend is reliable and sustainable. As a result, readers should always check whether AME Elite Consortium Berhad has been able to grow its dividends, or if the dividend might be cut.
See our latest analysis for AME Elite Consortium Berhad
If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. That's why it's good to see AME Elite Consortium Berhad paying out a modest 41% of its earnings. That said, even highly profitable companies sometimes might not generate enough cash to pay the dividend, which is why we should always check if the dividend is covered by cash flow. The company paid out 90% of its free cash flow over the last year, which we think is outside the ideal range for most businesses. Cash flows are usually much more volatile than earnings, so this could be a temporary effect - but we'd generally want to look more closely here.
AME Elite Consortium Berhad paid out less in dividends than it reported in profits, but unfortunately it didn't generate enough cash to cover the dividend. Cash is king, as they say, and were AME Elite Consortium Berhad to repeatedly pay dividends that aren't well covered by cashflow, we would consider this a warning sign.
Click here to see the company's payout ratio, plus analyst estimates of its future dividends.
Have Earnings And Dividends Been Growing?
Stocks in companies that generate sustainable earnings growth often make the best dividend prospects, as it is easier to lift the dividend when earnings are rising. Investors love dividends, so if earnings fall and the dividend is reduced, expect a stock to be sold off heavily at the same time. With that in mind, we're encouraged by the steady growth at AME Elite Consortium Berhad, with earnings per share up 9.5% on average over the last five years. Earnings have been growing at a steady rate, but we're concerned dividend payments consumed most of the company's cash flow over the past year.
Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. In the past four years, AME Elite Consortium Berhad has increased its dividend at approximately 32% a year on average. It's encouraging to see the company lifting dividends while earnings are growing, suggesting at least some corporate interest in rewarding shareholders.
Final Takeaway
Should investors buy AME Elite Consortium Berhad for the upcoming dividend? AME Elite Consortium Berhad delivered reasonable earnings per share growth in recent times, and paid out less than half its profits and 90% of its cash flow over the last year, which is a mediocre outcome. Overall we're not hugely bearish on the stock, but there are likely better dividend investments out there.
If you're not too concerned about AME Elite Consortium Berhad's ability to pay dividends, you should still be mindful of some of the other risks that this business faces. In terms of investment risks, we've identified 1 warning sign with AME Elite Consortium Berhad and understanding them should be part of your investment process.
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.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com
