Only Four Days Left To Cash In On Pintaras Jaya Berhad's (KLSE:PTARAS) Dividend

Readers hoping to buy Pintaras Jaya Berhad (KLSE:PTARAS) for its dividend will need to make their move shortly, as the stock is about to trade ex-dividend. You will need to purchase shares before the 23rd of December to receive the dividend, which will be paid on the 7th of January.

Pintaras Jaya Berhad's upcoming dividend is RM0.06 a share, following on from the last 12 months, when the company distributed a total of RM0.10 per share to shareholders. Calculating the last year's worth of payments shows that Pintaras Jaya Berhad has a trailing yield of 3.5% on the current share price of MYR2.82. Dividends are a major contributor to investment returns for long term holders, but only if the dividend continues to be paid. So we need to check whether the dividend payments are covered, and if earnings are growing.

See our latest analysis for Pintaras Jaya 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 Pintaras Jaya Berhad paying out a modest 43% of its earnings. 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. Thankfully its dividend payments took up just 47% of the free cash flow it generated, which is a comfortable payout ratio.

It's positive to see that Pintaras Jaya 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 Pintaras Jaya Berhad's earnings per share have dropped 6.2% a year over the past five years. When earnings per share fall, the maximum amount of dividends that can be paid also falls.

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, Pintaras Jaya Berhad has lifted its dividend by approximately 2.9% a year on average.

Final Takeaway

Has Pintaras Jaya Berhad got what it takes to maintain its dividend payments? Pintaras Jaya Berhad has comfortably low cash and profit payout ratios, which may mean the dividend is sustainable even in the face of a sharp decline in earnings per share. Still, we consider declining earnings to be a warning sign. While it does have some good things going for it, we're a bit ambivalent and it would take more to convince us of Pintaras Jaya Berhad's dividend merits.

While it's tempting to invest in Pintaras Jaya Berhad for the dividends alone, you should always be mindful of the risks involved. Our analysis shows 1 warning sign for Pintaras Jaya Berhad and you should be aware of it before buying any shares.

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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