It looks like Kumpulan H & L High-Tech Berhad (KLSE:HIGHTEC) is about to go ex-dividend in the next 3 days. The ex-dividend date is one business day before a company's record date, which is the date on which the company determines which shareholders are entitled to receive a 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. Accordingly, Kumpulan H & L High-Tech Berhad investors that purchase the stock on or after the 23rd of February will not receive the dividend, which will be paid on the 10th of March.
The company's next dividend payment will be RM0.01 per share, and in the last 12 months, the company paid a total of RM0.03 per share. Last year's total dividend payments show that Kumpulan H & L High-Tech Berhad has a trailing yield of 2.8% on the current share price of MYR1.07. Dividends are an important source of income to many shareholders, but the health of the business is crucial to maintaining those dividends. That's why we should always check whether the dividend payments appear sustainable, and if the company is growing.
Check out our latest analysis for Kumpulan H & L High-Tech 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 Kumpulan H & L High-Tech Berhad paying out a modest 41% of its earnings. A useful secondary check can be to evaluate whether Kumpulan H & L High-Tech Berhad generated enough free cash flow to afford its dividend. It distributed 39% of its free cash flow as dividends, a comfortable payout level for most companies.
It's positive to see that Kumpulan H & L High-Tech 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 Kumpulan H & L High-Tech Berhad paid out over the last 12 months.
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 earnings decline and the company is forced to cut its dividend, investors could watch the value of their investment go up in smoke. With that in mind, we're encouraged by the steady growth at Kumpulan H & L High-Tech Berhad, with earnings per share up 7.7% on average over the last five years. The company is retaining more than half of its earnings within the business, and it has been growing earnings at a decent rate. We think this is generally an attractive combination, as dividends can grow through a combination of earnings growth and or a higher payout ratio over time.