Here's What We Like About Bank Islam Malaysia Berhad's (KLSE:BIMB) Upcoming Dividend

Bank Islam Malaysia Berhad (KLSE:BIMB) 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 important because any transaction on a stock needs to have been settled before the record date in order to be eligible for a dividend. Meaning, you will need to purchase Bank Islam Malaysia Berhad's shares before the 17th of December to receive the dividend, which will be paid on the 10th of January.

The company's next dividend payment will be RM00.11 per share, and in the last 12 months, the company paid a total of RM0.17 per share. Calculating the last year's worth of payments shows that Bank Islam Malaysia Berhad has a trailing yield of 6.4% on the current share price of RM02.63. Dividends are an important source of income to many shareholders, but the health of the business is crucial to maintaining those dividends. We need to see whether the dividend is covered by earnings and if it's growing.

See our latest analysis for Bank Islam Malaysia 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. Bank Islam Malaysia Berhad has a low and conservative payout ratio of just 17% of its income after tax.

Generally speaking, the lower a company's payout ratios, the more resilient its dividend usually is.

Click here to see the company's payout ratio, plus analyst estimates of its future dividends.

Have Earnings And Dividends Been Growing?

Companies that aren't growing their earnings can still be valuable, but it is even more important to assess the sustainability of the dividend if it looks like the company will struggle to grow. 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 explains why we're not overly excited about Bank Islam Malaysia Berhad's flat earnings over the past five years. It's better than seeing them drop, certainly, but over the long term, all of the best dividend stocks are able to meaningfully grow their earnings per share.

The main way most investors will assess a company's dividend prospects is by checking the historical rate of dividend growth. In the past three years, Bank Islam Malaysia Berhad has increased its dividend at approximately 15% a year on average.

To Sum It Up

Should investors buy Bank Islam Malaysia Berhad for the upcoming dividend? Bank Islam Malaysia Berhad has seen its earnings per share stagnate in recent years, although the company reinvests more than half of its profits in the business, which could bode well for its future prospects. Overall, Bank Islam Malaysia Berhad looks like a promising dividend stock in this analysis, and we think it would be worth investigating further.

Curious what other investors think of Bank Islam Malaysia Berhad? See what analysts are forecasting, with this visualisation of its historical and future estimated earnings and cash flow.

If you're in the market for strong dividend payers, we recommend checking our selection of top 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.