It looks like Suria Capital Holdings Berhad (KLSE:SURIA) is about to go ex-dividend in the next three 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 of consequence because whenever a stock is bought or sold, the trade takes at least two business day to settle. Accordingly, Suria Capital Holdings Berhad investors that purchase the stock on or after the 11th of July will not receive the dividend, which will be paid on the 26th of July.
The company’s next dividend payment will be RM00.015 per share, and in the last 12 months, the company paid a total of RM0.035 per share. Calculating the last year’s worth of payments shows that Suria Capital Holdings Berhad has a trailing yield of 1.8% on the current share price of RM01.99. 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! That’s why we should always check whether the dividend payments appear sustainable, and if the company is growing.
View our latest analysis for Suria Capital Holdings 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. Suria Capital Holdings Berhad paid out a comfortable 31% of its profit last year. Yet cash flows are even more important than profits for assessing a dividend, so we need to see if the company generated enough cash to pay its distribution. Thankfully its dividend payments took up just 42% of the free cash flow it generated, which is a comfortable payout ratio.
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?
Businesses with shrinking earnings are tricky from a dividend perspective. If business enters a downturn and the dividend is cut, the company could see its value fall precipitously. Suria Capital Holdings Berhad’s earnings per share have fallen at approximately 6.2% a year over the previous five years. When earnings per share fall, the maximum amount of dividends that can be paid also falls.
Many investors will assess a company’s dividend performance by evaluating how much the dividend payments have changed over time. Suria Capital Holdings Berhad has seen its dividend decline 3.8% 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.
Final Takeaway
Should investors buy Suria Capital Holdings Berhad for the upcoming dividend? Suria Capital Holdings Berhad has comfortably low cash and profit payout ratios, which may mean the dividend is sustainable even in the face of a sharp decline in earnings per share. Still, we consider declining earnings to be a warning sign. To summarise, Suria Capital Holdings Berhad looks okay on this analysis, although it doesn’t appear a stand-out opportunity.
On that note, you’ll want to research what risks Suria Capital Holdings Berhad is facing. For example, we’ve found 1 warning sign for Suria Capital Holdings Berhad that we recommend you consider before investing in the business.
If you’re in the market for strong dividend payers, we recommend checking our selection of top dividend stocks.
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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.
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