Readers hoping to buy Teck Guan Perdana Berhad (KLSE:TECGUAN) for its dividend will need to make their move shortly, as the stock is about to trade ex-dividend. 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 of consequence because whenever a stock is bought or sold, the trade takes at least two business day to settle. Meaning, you will need to purchase Teck Guan Perdana Berhad's shares before the 25th of July to receive the dividend, which will be paid on the 12th of August.

The company's next dividend payment will be RM00.04 per share, and in the last 12 months, the company paid a total of RM0.04 per share. Looking at the last 12 months of distributions, Teck Guan Perdana Berhad has a trailing yield of approximately 2.2% on its current stock price of RM01.84. 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! So we need to investigate whether Teck Guan Perdana Berhad can afford its dividend, and if the dividend could grow.

Check out our latest analysis for Teck Guan Perdana Berhad

Dividends are typically paid out of company income, so if a company pays out more than it earned, its dividend is usually at a higher risk of being cut. Teck Guan Perdana Berhad is paying out just 18% of its profit after tax, which is comfortably low and leaves plenty of breathing room in the case of adverse events. That said, even highly profitable companies sometimes might not generate enough cash to pay the dividend, which is why we should always check if the dividend is covered by cash flow. What's good is that dividends were well covered by free cash flow, with the company paying out 23% of its cash flow last year.

It's encouraging to see that the dividend is covered by both profit and cash flow. This generally suggests the dividend is sustainable, as long as earnings don't drop precipitously.

Click here to see how much of its profit Teck Guan Perdana 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. That's why it's comforting to see Teck Guan Perdana Berhad's earnings have been skyrocketing, up 29% per annum for the past five years. Teck Guan Perdana Berhad looks like a real growth company, with earnings per share growing at a cracking pace and the company reinvesting most of its profits in the business.