CIMB Group Holdings Berhad (KLSE:CIMB) Will Pay A RM00.255 Dividend In Three Days

It looks like CIMB Group Holdings Berhad (KLSE:CIMB) is about to go ex-dividend in the next 3 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. In other words, investors can purchase CIMB Group Holdings Berhad's shares before the 15th of March in order to be eligible for the dividend, which will be paid on the 3rd of April.

The company's next dividend payment will be RM00.255 per share, and in the last 12 months, the company paid a total of RM0.35 per share. Based on the last year's worth of payments, CIMB Group Holdings Berhad has a trailing yield of 5.6% on the current stock price of RM06.65. If you buy this business for its dividend, you should have an idea of whether CIMB Group Holdings Berhad's dividend is reliable and sustainable. So we need to investigate whether CIMB Group Holdings Berhad can afford its dividend, and if the dividend could grow.

View our latest analysis for CIMB Group Holdings Berhad

If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. CIMB Group Holdings Berhad paid out more than half (55%) of its earnings last year, which is a regular payout ratio for most companies.

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?

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 business enters a downturn and the dividend is cut, the company could see its value fall precipitously. It's not encouraging to see that CIMB Group Holdings Berhad's earnings are effectively flat over the past five years. We'd take that over an earnings decline any day, but in the long run, the best dividend stocks all grow their earnings per share.

Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. CIMB Group Holdings Berhad has delivered 4.7% dividend growth per year on average over the past 10 years.

To Sum It Up

From a dividend perspective, should investors buy or avoid CIMB Group Holdings Berhad? CIMB Group Holdings Berhad's earnings are effectively flat over recent years, even as the company pays 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.

However if you're still interested in CIMB Group Holdings Berhad as a potential investment, you should definitely consider some of the risks involved with CIMB Group Holdings Berhad. Our analysis shows 1 warning sign for CIMB Group Holdings Berhad and you should be aware of this 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.