There's A Lot To Like About AEON Credit Service (M) Berhad's (KLSE:AEONCR) Upcoming RM0.28 Dividend

AEON Credit Service (M) Berhad (KLSE:AEONCR) stock is about to trade ex-dividend in 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. The ex-dividend date is important because any transaction on a stock needs to have been settled before the record date in order to be eligible for a dividend. Accordingly, AEON Credit Service (M) Berhad investors that purchase the stock on or after the 14th of October will not receive the dividend, which will be paid on the 3rd of November.

The company's next dividend payment will be RM0.28 per share, on the back of last year when the company paid a total of RM0.43 to shareholders. Based on the last year's worth of payments, AEON Credit Service (M) Berhad has a trailing yield of 3.2% on the current stock price of MYR13.58. If you buy this business for its dividend, you should have an idea of whether AEON Credit Service (M) Berhad's dividend is reliable and sustainable. As a result, readers should always check whether AEON Credit Service (M) Berhad has been able to grow its dividends, or if the dividend might be cut.

View our latest analysis for AEON Credit Service (M) 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. Fortunately AEON Credit Service (M) Berhad's payout ratio is modest, at just 31% of profit.

When a company paid out less in dividends than it earned in profit, this generally suggests its dividend is affordable. The lower the % of its profit that it pays out, the greater the margin of safety for the dividend if the business enters a downturn.

Click here to see the company's payout ratio, plus analyst estimates of its future dividends.

Have Earnings And Dividends Been Growing?

Stocks in companies that generate sustainable earnings growth often make the best dividend prospects, as it is easier to lift the dividend when earnings are rising. If earnings decline and the company is forced to cut its dividend, investors could watch the value of their investment go up in smoke. With that in mind, we're encouraged by the steady growth at AEON Credit Service (M) Berhad, with earnings per share up 6.6% on average over the last five years.

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, AEON Credit Service (M) Berhad has lifted its dividend by approximately 10% a year on average. We're glad to see dividends rising alongside earnings over a number of years, which may be a sign the company intends to share the growth with shareholders.

The Bottom Line

Is AEON Credit Service (M) Berhad an attractive dividend stock, or better left on the shelf? It has been growing its earnings per share somewhat in recent years, although it reinvests more than half its earnings in the business, which could suggest there are some growth projects that have not yet reached fruition. Overall, AEON Credit Service (M) Berhad looks like a promising dividend stock in this analysis, and we think it would be worth investigating further.

In light of that, while AEON Credit Service (M) Berhad has an appealing dividend, it's worth knowing the risks involved with this stock. To help with this, we've discovered 2 warning signs for AEON Credit Service (M) Berhad (1 is potentially serious!) that you ought to be aware of before buying the shares.

Generally, we wouldn't recommend just buying the first dividend stock you see. Here's a curated list of interesting stocks that are strong dividend payers.

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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.