Yenher Holdings Berhad (KLSE:YENHER) 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. 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 Yenher Holdings Berhad's shares before the 15th of March in order to receive the dividend, which the company will pay on the 5th of April.
The company's next dividend payment will be RM00.015 per share. Last year, in total, the company distributed RM0.03 to shareholders. Calculating the last year's worth of payments shows that Yenher Holdings Berhad has a trailing yield of 3.4% on the current share price of RM00.875. Dividends are a major contributor to investment returns for long term holders, but only if the dividend continues to be paid. So we need to investigate whether Yenher Holdings Berhad can afford its dividend, and if the dividend could grow.
View our latest analysis for Yenher Holdings Berhad
If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. Fortunately Yenher Holdings Berhad's payout ratio is modest, at just 42% of profit. A useful secondary check can be to evaluate whether Yenher Holdings Berhad generated enough free cash flow to afford its dividend. Fortunately, it paid out only 31% of its free cash flow in the past year.
It's positive to see that Yenher 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.
Click here to see how much of its profit Yenher Holdings Berhad paid out over the last 12 months.
Have Earnings And Dividends Been Growing?
Businesses with shrinking earnings are tricky from a dividend perspective. If earnings fall far enough, the company could be forced to cut its dividend. Readers will understand then, why we're concerned to see Yenher Holdings Berhad's earnings per share have dropped 9.4% a year over the past five years. When earnings per share fall, the maximum amount of dividends that can be paid also falls.
Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. Yenher Holdings Berhad's dividend payments are broadly unchanged compared to where they were three years ago. If a company's dividend stays flat while earnings are in decline, this is typically a sign that it is paying out a larger percentage of its earnings. This can become unsustainable if earnings fall far enough.