Some investors rely on dividends for growing their wealth, and if you're one of those dividend sleuths, you might be intrigued to know that UMS Holdings Berhad (KLSE:UMS) is about to go ex-dividend in just 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. It is important to be aware of the ex-dividend date because any trade on the stock needs to have been settled on or before the record date. In other words, investors can purchase UMS Holdings Berhad's shares before the 22nd of March in order to be eligible for the dividend, which will be paid on the 8th of April.

The company's next dividend payment will be RM00.10 per share, and in the last 12 months, the company paid a total of RM0.10 per share. Based on the last year's worth of payments, UMS Holdings Berhad has a trailing yield of 4.6% on the current stock price of RM02.17. If you buy this business for its dividend, you should have an idea of whether UMS Holdings Berhad's dividend is reliable and sustainable. So we need to check whether the dividend payments are covered, and if earnings are growing.

See our latest analysis for UMS Holdings 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. Fortunately UMS Holdings Berhad's payout ratio is modest, at just 30% of profit. A useful secondary check can be to evaluate whether UMS Holdings Berhad generated enough free cash flow to afford its dividend.

Click here to see how much of its profit UMS 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. This is why it's a relief to see UMS Holdings Berhad earnings per share are up 6.9% per annum over the last five years.

Many investors will assess a company's dividend performance by evaluating how much the dividend payments have changed over time. UMS Holdings Berhad's dividend payments per share have declined at 5.7% per year on average over the past 10 years, which is uninspiring. UMS Holdings Berhad is a rare case where dividends have been decreasing at the same time as earnings per share have been improving. It's unusual to see, and could point to unstable conditions in the core business, or more rarely an intensified focus on reinvesting profits.