Regular readers will know that we love our dividends at Simply Wall St, which is why it's exciting to see DKLS Industries Berhad (KLSE:DKLS) is about to trade ex-dividend in the next 3 days. The ex-dividend date is usually set to be one business day before the record date which is the cut-off date on which you must be present on the company's books as a shareholder in order to receive the dividend. The ex-dividend date is an important date to be aware of as any purchase of the stock made on or after this date might mean a late settlement that doesn't show on the record date. In other words, investors can purchase DKLS Industries Berhad's shares before the 28th of July in order to be eligible for the dividend, which will be paid on the 18th of August.
The company's upcoming dividend is RM0.03 a share, following on from the last 12 months, when the company distributed a total of RM0.03 per share to shareholders. Calculating the last year's worth of payments shows that DKLS Industries Berhad has a trailing yield of 1.4% on the current share price of MYR2.16. 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! We need to see whether the dividend is covered by earnings and if it's growing.
Check out our latest analysis for DKLS Industries Berhad
If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. DKLS Industries Berhad is paying out just 17% of its profit after tax, which is comfortably low and leaves plenty of breathing room in the case of adverse events. A useful secondary check can be to evaluate whether DKLS Industries Berhad generated enough free cash flow to afford its dividend. It distributed 30% of its free cash flow as dividends, a comfortable payout level for most companies.
It's positive to see that DKLS Industries 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 DKLS Industries 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 earnings fall far enough, the company could be forced to cut its dividend. That's why it's comforting to see DKLS Industries Berhad's earnings have been skyrocketing, up 24% per annum for the past five years. DKLS Industries 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.