Regular readers will know that we love our dividends at Simply Wall St, which is why it's exciting to see Cepatwawasan Group Berhad (KLSE:CEPAT) is about to trade ex-dividend in the next 3 days. The ex-dividend date is two business days before a company's record date in most cases, which is the date on which the company determines which shareholders are entitled to receive a dividend. The ex-dividend date is important as the process of settlement involves at least two full business days. So if you miss that date, you would not show up on the company's books on the record date. Therefore, if you purchase Cepatwawasan Group Berhad's shares on or after the 10th of April, you won't be eligible to receive the dividend, when it is paid on the 29th of April.
The company's upcoming dividend is RM00.05 a share, following on from the last 12 months, when the company distributed a total of RM0.04 per share to shareholders. Based on the last year's worth of payments, Cepatwawasan Group Berhad stock has a trailing yield of around 5.5% on the current share price of RM00.725. 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 Cepatwawasan Group Berhad has been able to grow its dividends, or if the dividend might be cut.
If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. Fortunately Cepatwawasan Group Berhad's payout ratio is modest, at just 33% of profit. A useful secondary check can be to evaluate whether Cepatwawasan Group Berhad generated enough free cash flow to afford its dividend. It distributed 45% of its free cash flow as dividends, a comfortable payout level for most companies.
It's positive to see that Cepatwawasan Group 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.
Check out our latest analysis for Cepatwawasan Group Berhad
Click here to see how much of its profit Cepatwawasan Group Berhad paid out over the last 12 months.
Have Earnings And Dividends Been Growing?
Businesses with strong growth prospects usually make the best dividend payers, because it's easier to grow dividends when earnings per share are improving. If business enters a downturn and the dividend is cut, the company could see its value fall precipitously. That's why it's comforting to see Cepatwawasan Group Berhad's earnings have been skyrocketing, up 120% per annum for the past five years. Cepatwawasan Group Berhad is paying out less than half its earnings and cash flow, while simultaneously growing earnings per share at a rapid clip. This is a very favourable combination that can often lead to the dividend multiplying over the long term, if earnings grow and the company pays out a higher percentage of its earnings.