It looks like Tien Wah Press Holdings Berhad (KLSE:TIENWAH) is about to go ex-dividend in the next 3 days. Typically, the ex-dividend date is one business day before the record date which is the date on which a company determines the shareholders eligible 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. Meaning, you will need to purchase Tien Wah Press Holdings Berhad's shares before the 7th of July to receive the dividend, which will be paid on the 31st of July.
The company's next dividend payment will be RM0.028 per share, and in the last 12 months, the company paid a total of RM0.056 per share. Calculating the last year's worth of payments shows that Tien Wah Press Holdings Berhad has a trailing yield of 6.7% on the current share price of MYR0.835. 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 Tien Wah Press Holdings Berhad can afford its dividend, and if the dividend could grow.
Check out our latest analysis for Tien Wah Press Holdings 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. Tien Wah Press Holdings Berhad's dividend is not well covered by earnings, as the company lost money last year. This is not a sustainable state of affairs, so it would be worth investigating if earnings are expected to recover. Considering the lack of profitability, we also need to check if the company generated enough cash flow to cover the dividend payment. If cash earnings don't cover the dividend, the company would have to pay dividends out of cash in the bank, or by borrowing money, neither of which is long-term sustainable. It distributed 43% of its free cash flow as dividends, a comfortable payout level for most companies.
Click here to see how much of its profit Tien Wah Press Holdings 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. Investors love dividends, so if earnings fall and the dividend is reduced, expect a stock to be sold off heavily at the same time. Tien Wah Press Holdings Berhad was unprofitable last year, but at least the general trend suggests its earnings have been improving over the past five years. Even so, an unprofitable company whose business does not quickly recover is usually not a good candidate for dividend investors.