Regular readers will know that we love our dividends at Simply Wall St, which is why it's exciting to see CYL Corporation Berhad (KLSE:CYL) is about to trade ex-dividend in the next 3 days. The ex-dividend date is two business days before a company's record date in most cases, which is the date on which the company determines which shareholders are entitled to receive a dividend. 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. Accordingly, CYL Corporation Berhad investors that purchase the stock on or after the 9th of October will not receive the dividend, which will be paid on the 23rd of October.
The company's next dividend payment will be RM00.01 per share. Last year, in total, the company distributed RM0.01 to shareholders. Based on the last year's worth of payments, CYL Corporation Berhad has a trailing yield of 6.7% on the current stock price of RM00.30. If you buy this business for its dividend, you should have an idea of whether CYL Corporation Berhad's dividend is reliable and sustainable. That's why we should always check whether the dividend payments appear sustainable, and if the company is growing.
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. CYL Corporation Berhad paid out a comfortable 47% of its profit last year. A useful secondary check can be to evaluate whether CYL Corporation Berhad generated enough free cash flow to afford its dividend.
See our latest analysis for CYL Corporation Berhad
Click here to see how much of its profit CYL Corporation 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. If earnings decline and the company is forced to cut its dividend, investors could watch the value of their investment go up in smoke. That's why it's comforting to see CYL Corporation Berhad's earnings have been skyrocketing, up 21% per annum for the past five years.
Many investors will assess a company's dividend performance by evaluating how much the dividend payments have changed over time. CYL Corporation Berhad's dividend payments per share have declined at 10% per year on average over the past 10 years, which is uninspiring. CYL Corporation Berhad is a rare case where dividends have been decreasing at the same time as earnings per share have been improving. It's unusual to see, and could point to unstable conditions in the core business, or more rarely an intensified focus on reinvesting profits.
Final Takeaway
From a dividend perspective, should investors buy or avoid CYL Corporation Berhad? We like that CYL Corporation Berhad has been successfully growing its earnings per share at a nice rate and reinvesting most of its profits in the business. However, we note the high cashflow payout ratio with some concern. Overall, it's not a bad combination, but we feel that there are likely more attractive dividend prospects out there.
With that in mind, a critical part of thorough stock research is being aware of any risks that stock currently faces. For example, we've found 3 warning signs for CYL Corporation Berhad (2 are significant!) that deserve your attention before investing in the shares.
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.