Only Four Days Left To Cash In On Superlon Holdings Berhad's (KLSE:SUPERLN) Dividend

Readers hoping to buy Superlon Holdings Berhad (KLSE:SUPERLN) for its dividend will need to make their move shortly, as the stock is about to trade ex-dividend. The ex-dividend date is usually set to be one business day before the record date which is the cut-off date on which you must be present on the company's books as a shareholder in order to receive the 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. This means that investors who purchase Superlon Holdings Berhad's shares on or after the 18th of December will not receive the dividend, which will be paid on the 30th of December.

The company's next dividend payment will be RM00.02 per share. Last year, in total, the company distributed RM0.027 to shareholders. Based on the last year's worth of payments, Superlon Holdings Berhad stock has a trailing yield of around 2.7% on the current share price of RM01.02. We love seeing companies pay a dividend, but it's also important to be sure that laying the golden eggs isn't going to kill our golden goose! That's why we should always check whether the dividend payments appear sustainable, and if the company is growing.

View our latest analysis for Superlon Holdings 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. Fortunately Superlon Holdings Berhad's payout ratio is modest, at just 33% of profit. A useful secondary check can be to evaluate whether Superlon Holdings Berhad generated enough free cash flow to afford its dividend. It paid out more than half (65%) of its free cash flow in the past year, which is within an average range for most companies.

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 how much of its profit Superlon Holdings Berhad paid out over the last 12 months.

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 fall far enough, the company could be forced to cut its dividend. With that in mind, we're encouraged by the steady growth at Superlon Holdings Berhad, with earnings per share up 5.0% on average over the last five years. Decent historical earnings per share growth suggests Superlon Holdings Berhad has been effectively growing value for shareholders. However, it's now paying out more than half its earnings as dividends. If management lifts the payout ratio further, we'd take this as a tacit signal that the company's growth prospects are slowing.

Many investors will assess a company's dividend performance by evaluating how much the dividend payments have changed over time. Superlon Holdings Berhad has delivered 8.2% dividend growth per year on average over the past 10 years. It's encouraging to see the company lifting dividends while earnings are growing, suggesting at least some corporate interest in rewarding shareholders.

To Sum It Up

Should investors buy Superlon Holdings Berhad for the upcoming dividend? Earnings per share have been growing at a steady rate, and Superlon Holdings Berhad paid out less than half its profits and more than half its free cash flow as dividends over the last year. In summary, while it has some positive characteristics, we're not inclined to race out and buy Superlon Holdings Berhad today.

On that note, you'll want to research what risks Superlon Holdings Berhad is facing. Our analysis shows 3 warning signs for Superlon Holdings Berhad that we strongly recommend you have a look at before investing in the company.

If you're in the market for strong dividend payers, we recommend checking our selection of top 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.