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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 PETRONAS Chemicals Group Berhad (KLSE:PCHEM) is about to go ex-dividend in just 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. Accordingly, PETRONAS Chemicals Group Berhad investors that purchase the stock on or after the 7th of September will not receive the dividend, which will be paid on the 21st of September.
The company's upcoming dividend is RM0.08 a share, following on from the last 12 months, when the company distributed a total of RM0.41 per share to shareholders. Calculating the last year's worth of payments shows that PETRONAS Chemicals Group Berhad has a trailing yield of 5.8% on the current share price of MYR7.12. 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! As a result, readers should always check whether PETRONAS Chemicals Group Berhad has been able to grow its dividends, or if the dividend might be cut.
Check out our latest analysis for PETRONAS Chemicals Group 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. PETRONAS Chemicals Group Berhad paid out 54% of its earnings to investors last year, a normal payout level for most businesses. 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. Over the last year, it paid out more than three-quarters (76%) of its free cash flow generated, which is fairly high and may be starting to limit reinvestment in the business.
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 the company's payout ratio, plus analyst estimates of its future dividends.
Have Earnings And Dividends Been Growing?
When earnings decline, dividend companies become much harder to analyse and own safely. If business enters a downturn and the dividend is cut, the company could see its value fall precipitously. That's why it's not ideal to see PETRONAS Chemicals Group Berhad's earnings per share have been shrinking at 3.3% a year over the previous five years.