Interested In Kerjaya Prospek Group Berhad's (KLSE:KERJAYA) Upcoming RM00.07 Dividend? You Have Three Days Left

Kerjaya Prospek Group Berhad (KLSE:KERJAYA) is about to trade ex-dividend in the next 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. It is important to be aware of the ex-dividend date because any trade on the stock needs to have been settled on or before the record date. Therefore, if you purchase Kerjaya Prospek Group Berhad's shares on or after the 13th of December, you won't be eligible to receive the dividend, when it is paid on the 20th of December.

The company's next dividend payment will be RM00.07 per share, and in the last 12 months, the company paid a total of RM0.10 per share. Based on the last year's worth of payments, Kerjaya Prospek Group Berhad has a trailing yield of 4.9% on the current stock price of RM02.43. Dividends are a major contributor to investment returns for long term holders, but only if the dividend continues to be paid. As a result, readers should always check whether Kerjaya Prospek Group Berhad has been able to grow its dividends, or if the dividend might be cut.

Check out our latest analysis for Kerjaya Prospek Group 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. It paid out 83% of its earnings as dividends last year, which is not unreasonable, but limits reinvestment in the business and leaves the dividend vulnerable to a business downturn. We'd be concerned if earnings began to decline. Yet cash flows are even more important than profits for assessing a dividend, so we need to see if the company generated enough cash to pay its distribution. Over the last year it paid out 64% of its free cash flow as dividends, within the usual range for most companies.

It's positive to see that Kerjaya Prospek Group 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?

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. Investors love dividends, so if earnings fall and the dividend is reduced, expect a stock to be sold off heavily at the same time. With that in mind, we're not enthused to see that Kerjaya Prospek Group Berhad's earnings per share have remained 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. A payout ratio of 83% looks like a tacit signal from management that reinvestment opportunities in the business are low. In line with limited earnings growth in recent years, this is not the most appealing combination.

The main way most investors will assess a company's dividend prospects is by checking the historical rate of dividend growth. In the last 10 years, Kerjaya Prospek Group Berhad has lifted its dividend by approximately 21% a year on average.

The Bottom Line

Is Kerjaya Prospek Group Berhad worth buying for its dividend? Kerjaya Prospek Group Berhad has struggled to grow its earnings per share, and while the company is paying out a majority of its earnings and cash flow in the form of dividends, the dividend payments don't appear unsustainable. In summary, it's hard to get excited about Kerjaya Prospek Group Berhad from a dividend perspective.

So if you want to do more digging on Kerjaya Prospek Group Berhad, you'll find it worthwhile knowing the risks that this stock faces. Case in point: We've spotted 1 warning sign for Kerjaya Prospek Group Berhad 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.