Yahoo Finance Why You Might Be Interested In Dayang Enterprise Holdings Bhd (KLSE:DAYANG) For Its Upcoming Dividend
Dayang Enterprise Holdings Bhd (KLSE:DAYANG) stock is about to trade ex-dividend in four days. The ex-dividend date is usually set to be one business day 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. The ex-dividend date is of consequence because whenever a stock is bought or sold, the trade takes at least two business day to settle. Thus, you can purchase Dayang Enterprise Holdings Bhd's shares before the 11th of March in order to receive the dividend, which the company will pay on the 22nd of March.
The company's next dividend payment will be RM00.03 per share. Last year, in total, the company distributed RM0.03 to shareholders. Based on the last year's worth of payments, Dayang Enterprise Holdings Bhd has a trailing yield of 2.7% on the current stock price of RM02.21. 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 Dayang Enterprise Holdings Bhd
Dividends are typically paid out of company income, so if a company pays out more than it earned, its dividend is usually at a higher risk of being cut. Dayang Enterprise Holdings Bhd has a low and conservative payout ratio of just 24% of its income after tax. Yet cash flow is typically more important than profit for assessing dividend sustainability, so we should always check if the company generated enough cash to afford its dividend. It paid out 11% of its free cash flow as dividends last year, which is conservatively low.
It's encouraging to see that the dividend is covered by both profit and cash flow. This generally suggests the dividend is sustainable, as long as earnings don't drop precipitously.
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. If business enters a downturn and the dividend is cut, the company could see its value fall precipitously. This is why it's a relief to see Dayang Enterprise Holdings Bhd earnings per share are up 2.6% per annum over the last five years. Growth has been anaemic. Yet with more than 75% of its earnings being kept in the business, there is ample room to reinvest in growth or lift the payout ratio - either of which could increase the dividend.
The main way most investors will assess a company's dividend prospects is by checking the historical rate of dividend growth. Dayang Enterprise Holdings Bhd has seen its dividend decline 1.1% per annum on average over the past 10 years, which is not great to see.
To Sum It Up
Is Dayang Enterprise Holdings Bhd worth buying for its dividend? Earnings per share growth has been growing somewhat, and Dayang Enterprise Holdings Bhd is paying out less than half its earnings and cash flow as dividends. This is interesting for a few reasons, as it suggests management may be reinvesting heavily in the business, but it also provides room to increase the dividend in time. It might be nice to see earnings growing faster, but Dayang Enterprise Holdings Bhd is being conservative with its dividend payouts and could still perform reasonably over the long run. There's a lot to like about Dayang Enterprise Holdings Bhd, and we would prioritise taking a closer look at it.
While it's tempting to invest in Dayang Enterprise Holdings Bhd for the dividends alone, you should always be mindful of the risks involved. For example, we've found 1 warning sign for Dayang Enterprise Holdings Bhd that we recommend you consider before investing in the business.
Generally, we wouldn't recommend just buying the first dividend stock you see. Here's a curated list of interesting stocks that are strong dividend payers.
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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.
