It looks like Classic Scenic Berhad (KLSE:CSCENIC) is about to go ex-dividend in the next day or two. The ex-dividend date is one business day before the record date, which is the cut-off date for shareholders to be present on the company's books to be eligible for a dividend payment. 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. Thus, you can purchase Classic Scenic Berhad's shares before the 12th of April in order to receive the dividend, which the company will pay on the 28th of April.
The company's next dividend payment will be RM0.055 per share, on the back of last year when the company paid a total of RM0.055 to shareholders. Based on the last year's worth of payments, Classic Scenic Berhad has a trailing yield of 6.0% on the current stock price of MYR0.915. 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 check whether the dividend payments are covered, and if earnings are growing.
Check out our latest analysis for Classic Scenic 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. Classic Scenic Berhad paid out 70% of its earnings to investors last year, a normal payout level for most businesses.
Click here to see how much of its profit Classic Scenic 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 Classic Scenic Berhad earnings per share are up 8.2% per annum over the last five years. While earnings have been growing at a credible rate, the company is paying out a majority of its earnings to shareholders. If management lifts the payout ratio further, we'd take this as a tacit signal that the company's growth prospects are slowing.
Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. Classic Scenic Berhad has seen its dividend decline 1.1% per annum on average over the past 10 years, which is not great to see.
To Sum It Up
Should investors buy Classic Scenic Berhad for the upcoming dividend? Classic Scenic Berhad has been generating some growth in earnings per share while paying out more than half of its earnings to shareholders in the form of dividends. We think this is a pretty attractive combination, and would be interested in investigating Classic Scenic Berhad more closely.