Readers hoping to buy Rhong Khen International Berhad (KLSE:RKI) for its dividend will need to make their move shortly, as the stock is about to trade ex-dividend. 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. 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. Thus, you can purchase Rhong Khen International Berhad's shares before the 22nd of December in order to receive the dividend, which the company will pay on the 13th of January.

The company's next dividend payment will be RM0.05 per share, and in the last 12 months, the company paid a total of RM0.06 per share. Based on the last year's worth of payments, Rhong Khen International Berhad has a trailing yield of 4.3% on the current stock price of MYR1.4. 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 Rhong Khen International Berhad has been able to grow its dividends, or if the dividend might be cut.

View our latest analysis for Rhong Khen International 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. Rhong Khen International Berhad paid out a comfortable 26% of its profit last year. 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. It distributed 48% of its free cash flow as dividends, a comfortable payout level for most companies.

It's positive to see that Rhong Khen International 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 how much of its profit Rhong Khen International Berhad paid out over the last 12 months.

Have Earnings And Dividends Been Growing?

When earnings decline, dividend companies become much harder to analyse and own safely. If business enters a downturn and the dividend is cut, the company could see its value fall precipitously. With that in mind, we're discomforted by Rhong Khen International Berhad's 8.4% per annum decline in earnings in the past five years. When earnings per share fall, the maximum amount of dividends that can be paid also falls.