Yahoo Finance Be Sure To Check Out Oriental Food Industries Holdings Berhad (KLSE:OFI) Before It Goes Ex-Dividend
Oriental Food Industries Holdings Berhad (KLSE:OFI) stock is about to trade ex-dividend in three days. The ex-dividend date occurs one day before the record date which is the day on which shareholders need to be on the company's books in order 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 Oriental Food Industries Holdings Berhad's shares on or after the 14th of June will not receive the dividend, which will be paid on the 10th of July.
The company's next dividend payment will be RM00.02 per share, and in the last 12 months, the company paid a total of RM0.065 per share. Based on the last year's worth of payments, Oriental Food Industries Holdings Berhad has a trailing yield of 3.3% on the current stock price of RM02.00. 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! We need to see whether the dividend is covered by earnings and if it's growing.
See our latest analysis for Oriental Food Industries Holdings 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. That's why it's good to see Oriental Food Industries Holdings Berhad paying out a modest 36% 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 good news is it paid out just 21% of its free cash flow in the last year.
It's positive to see that Oriental Food Industries Holdings 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.
Have Earnings And Dividends Been Growing?
Companies with consistently growing earnings per share generally make the best dividend stocks, as they usually find it easier to grow dividends per share. If earnings decline and the company is forced to cut its dividend, investors could watch the value of their investment go up in smoke. That's why it's comforting to see Oriental Food Industries Holdings Berhad's earnings have been skyrocketing, up 25% per annum for the past five years. Oriental Food Industries Holdings Berhad is paying out less than half its earnings and cash flow, while simultaneously growing earnings per share at a rapid clip. Companies with growing earnings and low payout ratios are often the best long-term dividend stocks, as the company can both grow its earnings and increase the percentage of earnings that it pays out, essentially multiplying the dividend.
Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. Oriental Food Industries Holdings Berhad has delivered 13% dividend growth per year on average over the past 10 years. It's exciting to see that both earnings and dividends per share have grown rapidly over the past few years.
Final Takeaway
Is Oriental Food Industries Holdings Berhad an attractive dividend stock, or better left on the shelf? Oriental Food Industries Holdings Berhad has grown its earnings per share while simultaneously reinvesting in the business. Unfortunately it's cut the dividend at least once in the past 10 years, but the conservative payout ratio makes the current dividend look sustainable. There's a lot to like about Oriental Food Industries Holdings Berhad, and we would prioritise taking a closer look at it.
On that note, you'll want to research what risks Oriental Food Industries Holdings Berhad is facing. Our analysis shows 1 warning sign for Oriental Food Industries Holdings Berhad and you should be aware of this before buying any shares.
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.
