Yahoo Finance Be Sure To Check Out PBA Holdings Bhd (KLSE:PBA) Before It Goes Ex-Dividend
PBA Holdings Bhd (KLSE:PBA) stock is about to trade ex-dividend in four 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. The ex-dividend date is important because any transaction on a stock needs to have been settled before the record date in order to be eligible for a dividend. Thus, you can purchase PBA Holdings Bhd's shares before the 15th of December in order to receive the dividend, which the company will pay on the 13th of January.
The company's next dividend payment will be RM0.015 per share, and in the last 12 months, the company paid a total of RM0.025 per share. Looking at the last 12 months of distributions, PBA Holdings Bhd has a trailing yield of approximately 3.3% on its current stock price of MYR0.76. 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 PBA Holdings Bhd has been able to grow its dividends, or if the dividend might be cut.
Check out our latest analysis for PBA Holdings Bhd
Dividends are usually paid out of company profits, so if a company pays out more than it earned then its dividend is usually at greater risk of being cut. PBA Holdings Bhd paid out just 9.5% of its profit last year, which we think is conservatively low and leaves plenty of margin for unexpected circumstances. A useful secondary check can be to evaluate whether PBA Holdings Bhd generated enough free cash flow to afford its dividend. The good news is it paid out just 11% of its free cash flow in the last year.
It's positive to see that PBA Holdings Bhd's dividend is covered by both profits and cash flow, since this is generally a sign that the dividend is sustainable, and a lower payout ratio usually suggests a greater margin of safety before the dividend gets cut.
Click here to see how much of its profit PBA Holdings Bhd paid out over the last 12 months.
Have Earnings And Dividends Been Growing?
Companies with consistently growing earnings per share generally make the best dividend stocks, as they usually find it easier to grow dividends per share. 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 PBA Holdings Bhd earnings per share are up 7.1% per annum over the last five years. Earnings per share have been growing at a decent rate, and the company is retaining more than three-quarters of its earnings in the business. This is an attractive combination, because when profits are reinvested effectively, growth can compound, with corresponding benefits for earnings and dividends in the future.
The main way most investors will assess a company's dividend prospects is by checking the historical rate of dividend growth. PBA Holdings Bhd's dividend payments per share have declined at 3.3% per year on average over the past 10 years, which is uninspiring. It's unusual to see earnings per share increasing at the same time as dividends per share have been in decline. We'd hope it's because the company is reinvesting heavily in its business, but it could also suggest business is lumpy.
To Sum It Up
Has PBA Holdings Bhd got what it takes to maintain its dividend payments? Earnings per share growth has been growing somewhat, and PBA Holdings Bhd is paying out less than half its earnings and cash flow as dividends. This is interesting for a few reasons, as it suggests management may be reinvesting heavily in the business, but it also provides room to increase the dividend in time. We would prefer to see earnings growing faster, but the best dividend stocks over the long term typically combine significant earnings per share growth with a low payout ratio, and PBA Holdings Bhd is halfway there. There's a lot to like about PBA Holdings Bhd, and we would prioritise taking a closer look at it.
In light of that, while PBA Holdings Bhd has an appealing dividend, it's worth knowing the risks involved with this stock. Our analysis shows 2 warning signs for PBA Holdings Bhd and you should be aware of them before buying any shares.
Generally, we wouldn't recommend just buying the first dividend stock you see. Here's a curated list of interesting stocks that are strong dividend payers.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
Join A Paid User Research Session
You’ll receive a US$30 Amazon Gift card for 1 hour of your time while helping us build better investing tools for the individual investors like yourself. Sign up here
