UMS-Neiken Group Berhad (KLSE:UMSNGB) Pays A RM00.13 Dividend In Just Four Days

It looks like UMS-Neiken Group Berhad (KLSE:UMSNGB) is about to go ex-dividend in the next 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 important because any transaction on a stock needs to have been settled before the record date in order to be eligible for a dividend. In other words, investors can purchase UMS-Neiken Group Berhad's shares before the 15th of April in order to be eligible for the dividend, which will be paid on the 30th of April.

The company's upcoming dividend is RM00.13 a share, following on from the last 12 months, when the company distributed a total of RM0.03 per share to shareholders. Looking at the last 12 months of distributions, UMS-Neiken Group Berhad has a trailing yield of approximately 2.4% on its current stock price of RM01.25. 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 UMS-Neiken Group Berhad has been able to grow its dividends, or if the dividend might be cut.

View our latest analysis for UMS-Neiken Group Berhad

If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. Fortunately UMS-Neiken Group Berhad's payout ratio is modest, at just 47% of profit. Yet cash flow is typically more important than profit for assessing dividend sustainability, so we should always check if the company generated enough cash to afford its dividend. It distributed 35% of its free cash flow as dividends, a comfortable payout level for most companies.

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 how much of its profit UMS-Neiken Group Berhad paid out over the last 12 months.

Have Earnings And Dividends Been Growing?

Companies with falling earnings are riskier for dividend shareholders. If earnings decline and the company is forced to cut its dividend, investors could watch the value of their investment go up in smoke. With that in mind, we're discomforted by UMS-Neiken Group Berhad's 9.1% per annum decline in earnings in the past 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. Since the start of our data, 10 years ago, UMS-Neiken Group Berhad has lifted its dividend by approximately 4.1% a year on average.

To Sum It Up

Should investors buy UMS-Neiken Group Berhad for the upcoming dividend? UMS-Neiken Group 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. In summary, while it has some positive characteristics, we're not inclined to race out and buy UMS-Neiken Group Berhad today.

On that note, you'll want to research what risks UMS-Neiken Group Berhad is facing. In terms of investment risks, we've identified 3 warning signs with UMS-Neiken Group Berhad and understanding them should be part of your investment process.

A common investing mistake is buying the first interesting stock you see. Here you can find a full list of high-yield dividend stocks.

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.