Low Keng Huat (Singapore) Limited (SGX:F1E) stock is about to trade ex-dividend in 3 days. The ex-dividend date is one business day before a company's record date, which is the date on which the company determines which shareholders are entitled to receive a 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. Meaning, you will need to purchase Low Keng Huat (Singapore)'s shares before the 7th of June to receive the dividend, which will be paid on the 21st of June.

The company's next dividend payment will be S$0.015 per share, and in the last 12 months, the company paid a total of S$0.015 per share. Looking at the last 12 months of distributions, Low Keng Huat (Singapore) has a trailing yield of approximately 4.8% on its current stock price of S$0.31. If you buy this business for its dividend, you should have an idea of whether Low Keng Huat (Singapore)'s dividend is reliable and sustainable. So we need to check whether the dividend payments are covered, and if earnings are growing.

View our latest analysis for Low Keng Huat (Singapore)

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. Low Keng Huat (Singapore) lost money last year, so the fact that it's paying a dividend is certainly disconcerting. There might be a good reason for this, but we'd want to look into it further before getting comfortable. With the recent loss, it's important to check if the business generated enough cash to pay its dividend. 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. The good news is it paid out just 5.0% of its free cash flow in the last year.

Click here to see how much of its profit Low Keng Huat (Singapore) paid out over the last 12 months.

Have Earnings And Dividends Been Growing?

Companies with falling earnings are riskier for dividend shareholders. If earnings fall far enough, the company could be forced to cut its dividend. Low Keng Huat (Singapore) reported a loss last year, and the general trend suggests its earnings have also been declining in recent years, making us wonder if the dividend is at risk.

Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. Low Keng Huat (Singapore) has seen its dividend decline 6.7% per annum on average over the past 10 years, which is not great to see. While it's not great that earnings and dividends per share have fallen in recent years, we're encouraged by the fact that management has trimmed the dividend rather than risk over-committing the company in a risky attempt to maintain yields to shareholders.