Tien Wah Press Holdings Berhad (KLSE:TIENWAH) Stock Goes Ex-Dividend In Just Two Days

Tien Wah Press Holdings Berhad (KLSE:TIENWAH) is about to trade ex-dividend in the next two days. Typically, the ex-dividend date is one business day before the record date which is the date on which a company determines the shareholders eligible to receive a dividend. The ex-dividend date is an important date to be aware of as any purchase of the stock made on or after this date might mean a late settlement that doesn't show on the record date. Therefore, if you purchase Tien Wah Press Holdings Berhad's shares on or after the 9th of October, you won't be eligible to receive the dividend, when it is paid on the 30th of October.

The company's upcoming dividend is RM00.028 a share, following on from the last 12 months, when the company distributed a total of RM0.056 per share to shareholders. Last year's total dividend payments show that Tien Wah Press Holdings Berhad has a trailing yield of 6.1% on the current share price of RM00.925. 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! We need to see whether the dividend is covered by earnings and if it's growing.

View our latest analysis for Tien Wah Press 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. Last year Tien Wah Press Holdings Berhad paid out 93% of its profits as dividends to shareholders, suggesting the dividend is not well covered by earnings. A useful secondary check can be to evaluate whether Tien Wah Press Holdings Berhad generated enough free cash flow to afford its dividend. Dividends consumed 55% of the company's free cash flow last year, which is within a normal range for most dividend-paying organisations.

It's good to see that while Tien Wah Press Holdings Berhad's dividends were not well covered by profits, at least they are affordable from a cash perspective. Still, if this were to happen repeatedly, we'd be concerned about whether the dividend is sustainable in a downturn.

Click here to see how much of its profit Tien Wah Press 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. Investors love dividends, so if earnings fall and the dividend is reduced, expect a stock to be sold off heavily at the same time. That's why it's comforting to see Tien Wah Press Holdings Berhad's earnings have been skyrocketing, up 31% per annum for the past five years.

Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. Tien Wah Press Holdings Berhad's dividend payments per share have declined at 9.7% per year on average over the past 10 years, which is uninspiring. Tien Wah Press Holdings Berhad is a rare case where dividends have been decreasing at the same time as earnings per share have been improving. It's unusual to see, and could point to unstable conditions in the core business, or more rarely an intensified focus on reinvesting profits.

To Sum It Up

Is Tien Wah Press Holdings Berhad an attractive dividend stock, or better left on the shelf? Tien Wah Press Holdings Berhad has been growing its earnings per share nicely, although judging by the difference between its profit and cashflow payout ratios, the company might have reported some write-offs over the last year. Overall we're not hugely bearish on the stock, but there are likely better dividend investments out there.

If you want to look further into Tien Wah Press Holdings Berhad, it's worth knowing the risks this business faces. Every company has risks, and we've spotted 2 warning signs for Tien Wah Press Holdings Berhad you should know about.

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.