GDB Holdings Berhad (KLSE:GDB) Will Pay A RM0.01 Dividend In Three Days

GDB Holdings Berhad (KLSE:GDB) stock is about to trade ex-dividend in three days. Investors can purchase shares before the 12th of March in order to be eligible for this dividend, which will be paid on the 26th of March.

GDB Holdings Berhad's next dividend payment will be RM0.01 per share, and in the last 12 months, the company paid a total of RM0.02 per share. Last year's total dividend payments show that GDB Holdings Berhad has a trailing yield of 2.3% on the current share price of MYR0.865. If you buy this business for its dividend, you should have an idea of whether GDB Holdings Berhad's dividend is reliable and sustainable. We need to see whether the dividend is covered by earnings and if it's growing.

View our latest analysis for GDB Holdings 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. That's why it's good to see GDB Holdings Berhad paying out a modest 49% of its earnings. A useful secondary check can be to evaluate whether GDB Holdings Berhad generated enough free cash flow to afford its dividend. Over the last year, it paid out more than three-quarters (85%) of its free cash flow generated, which is fairly high and may be starting to limit reinvestment in the business.

It's positive to see that GDB 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 the company's payout ratio, plus analyst estimates of its future dividends.

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. Readers will understand then, why we're concerned to see GDB Holdings Berhad's earnings per share have dropped 7.4% a year over the past five years. Such a sharp decline casts doubt on the future sustainability of the dividend.

Many investors will assess a company's dividend performance by evaluating how much the dividend payments have changed over time. GDB Holdings Berhad's dividend payments are effectively flat on where they were three years ago. When earnings are declining yet the dividends are flat, typically the company is either paying out a higher portion of its earnings, or paying out of cash or debt on the balance sheet, neither of which is ideal.

The Bottom Line

Has GDB Holdings Berhad got what it takes to maintain its dividend payments? Its earnings per share have been declining meaningfully, although it is paying out less than half its income and more than half its cash flow as dividends. Neither payout ratio appears an immediate concern, but we're concerned about the earnings. All things considered, we are not particularly enthused about GDB Holdings Berhad from a dividend perspective.

However if you're still interested in GDB Holdings Berhad as a potential investment, you should definitely consider some of the risks involved with GDB Holdings Berhad. For example, GDB Holdings Berhad has 2 warning signs (and 1 which is potentially serious) we think you should know about.

A common investment mistake is buying the first interesting stock you see. Here you can find a list of promising dividend stocks with a greater than 2% yield and an upcoming dividend.

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This article by Simply Wall St is general in nature. 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.
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