There's A Lot To Like About IJM Corporation Berhad's (KLSE:IJM) Upcoming RM00.02 Dividend

Readers hoping to buy IJM Corporation Berhad (KLSE:IJM) for its dividend will need to make their move shortly, as the stock is about to trade ex-dividend. 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 of consequence because whenever a stock is bought or sold, the trade takes at least two business day to settle. Meaning, you will need to purchase IJM Corporation Berhad's shares before the 13th of December to receive the dividend, which will be paid on the 27th of December.

The company's next dividend payment will be RM00.02 per share, and in the last 12 months, the company paid a total of RM0.08 per share. Last year's total dividend payments show that IJM Corporation Berhad has a trailing yield of 2.8% on the current share price of RM02.90. If you buy this business for its dividend, you should have an idea of whether IJM Corporation Berhad's dividend is reliable and sustainable. As a result, readers should always check whether IJM Corporation Berhad has been able to grow its dividends, or if the dividend might be cut.

Check out our latest analysis for IJM Corporation Berhad

Dividends are usually paid out of company profits, so if a company pays out more than it earned then its dividend is usually at greater risk of being cut. IJM Corporation Berhad paid out a comfortable 43% of its profit last year. That said, even highly profitable companies sometimes might not generate enough cash to pay the dividend, which is why we should always check if the dividend is covered by cash flow. Fortunately, it paid out only 30% of its free cash flow in the past year.

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 the company's payout ratio, plus analyst estimates of its future dividends.

Have Earnings And Dividends Been Growing?

Companies with consistently growing earnings per share generally make the best dividend stocks, as they usually find it easier to grow dividends per share. If earnings decline and the company is forced to cut its dividend, investors could watch the value of their investment go up in smoke. This is why it's a relief to see IJM Corporation Berhad earnings per share are up 6.9% per annum over the last five years. Management have been reinvested more than half of the company's earnings within the business, and the company has been able to grow earnings with this retained capital. We think this is generally an attractive combination, as dividends can grow through a combination of earnings growth and or a higher payout ratio over time.

Many investors will assess a company's dividend performance by evaluating how much the dividend payments have changed over time. In the last 10 years, IJM Corporation Berhad has lifted its dividend by approximately 0.6% a year on average.

To Sum It Up

Is IJM Corporation Berhad worth buying for its dividend? Earnings per share have been growing moderately, and IJM Corporation Berhad is paying out less than half its earnings and cash flow as dividends, which is an attractive combination as it suggests the company is investing in growth. We would prefer to see earnings growing faster, but the best dividend stocks over the long term typically combine significant earnings per share growth with a low payout ratio, and IJM Corporation Berhad is halfway there. It's a promising combination that should mark this company worthy of closer attention.

While it's tempting to invest in IJM Corporation Berhad for the dividends alone, you should always be mindful of the risks involved. For example - IJM Corporation Berhad has 1 warning sign we think you should be aware of.

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.