Here's What We Like About MCE Holdings Berhad's (KLSE:MCEHLDG) Upcoming Dividend

MCE Holdings Berhad (KLSE:MCEHLDG) stock is about to trade ex-dividend in 4 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 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, MCE Holdings Berhad investors that purchase the stock on or after the 15th of April will not receive the dividend, which will be paid on the 30th of April.

The company's next dividend payment will be RM00.015 per share. Last year, in total, the company distributed RM0.03 to shareholders. Calculating the last year's worth of payments shows that MCE Holdings Berhad has a trailing yield of 1.9% on the current share price of RM01.60. 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 MCE Holdings Berhad has been able to grow its dividends, or if the dividend might be cut.

View our latest analysis for MCE Holdings 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. MCE Holdings Berhad is paying out just 17% of its profit after tax, which is comfortably low and leaves plenty of breathing room in the case of adverse events. 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. It paid out 9.7% of its free cash flow as dividends last year, which is conservatively low.

It's positive to see that MCE Holdings Berhad'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 MCE Holdings 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 fall far enough, the company could be forced to cut its dividend. That's why it's comforting to see MCE Holdings Berhad's earnings have been skyrocketing, up 71% per annum for the past five years. MCE Holdings Berhad earnings per share have been sprinting ahead like the Road Runner at a track and field day; scarcely stopping even for a cheeky "beep-beep". We also like that it is reinvesting most of its profits in its business.'

The main way most investors will assess a company's dividend prospects is by checking the historical rate of dividend growth. It looks like the MCE Holdings Berhad dividends are largely the same as they were 10 years ago.

Final Takeaway

Is MCE Holdings Berhad an attractive dividend stock, or better left on the shelf? MCE Holdings Berhad has grown its earnings per share while simultaneously reinvesting in the business. Unfortunately it's cut the dividend at least once in the past 10 years, but the conservative payout ratio makes the current dividend look sustainable. There's a lot to like about MCE Holdings Berhad, and we would prioritise taking a closer look at it.

On that note, you'll want to research what risks MCE Holdings Berhad is facing. Our analysis shows 3 warning signs for MCE Holdings Berhad 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.

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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.