Interested In Bank Islam Malaysia Berhad's (KLSE:BIMB) Upcoming RM00.0422 Dividend? You Have Three Days Left

Bank Islam Malaysia Berhad (KLSE:BIMB) stock is about to trade ex-dividend in three days. The ex-dividend date occurs one day before the record date which is the day on which shareholders need to be on the company's books in order to receive a 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. Accordingly, Bank Islam Malaysia Berhad investors that purchase the stock on or after the 15th of March will not receive the dividend, which will be paid on the 5th of April.

The company's next dividend payment will be RM00.0422 per share. Last year, in total, the company distributed RM0.16 to shareholders. Looking at the last 12 months of distributions, Bank Islam Malaysia Berhad has a trailing yield of approximately 6.5% on its current stock price of RM02.57. 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.

View 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 paid out 68% of its earnings to investors last year, a normal payout level for most businesses.

Companies that pay out less in dividends than they earn in profits generally have more sustainable dividends. The lower the payout ratio, the more wiggle room the business has before it could be forced to cut the dividend.

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

Have Earnings And Dividends Been Growing?

Stocks with flat earnings can still be attractive dividend payers, but it is important to be more conservative with your approach and demand a greater margin for safety when it comes to dividend sustainability. If business enters a downturn and the dividend is cut, the company could see its value fall precipitously. That explains why we're not overly excited about Bank Islam Malaysia Berhad's flat earnings over the past five years. Better than seeing them fall off a cliff, for sure, but the best dividend stocks grow their earnings meaningfully over the long run.

Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. In the last two years, Bank Islam Malaysia Berhad has lifted its dividend by approximately 24% a year on average.

Final Takeaway

Has Bank Islam Malaysia Berhad got what it takes to maintain its dividend payments? Bank Islam Malaysia Berhad has been struggling to generate growth while also paying out more than half of its earnings to shareholders as dividends. At best we would put it on a watch-list to see if business conditions improve, as it doesn't look like a clear opportunity right now.

With that being said, if dividends aren't your biggest concern with Bank Islam Malaysia Berhad, you should know about the other risks facing this business. In terms of investment risks, we've identified 1 warning sign with Bank Islam Malaysia 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.

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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.