Bursa Malaysia Berhad (KLSE:BURSA) Goes Ex-Dividend Soon

Bursa Malaysia Berhad (KLSE:BURSA) is about to trade ex-dividend in the next 4 days. The ex-dividend date is one business day before a company's record date, which is the date on which the company determines which shareholders are entitled 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. Thus, you can purchase Bursa Malaysia Berhad's shares before the 17th of February in order to receive the dividend, which the company will pay on the 25th of February.

The company's upcoming dividend is RM00.26 a share, following on from the last 12 months, when the company distributed a total of RM0.36 per share to shareholders. Calculating the last year's worth of payments shows that Bursa Malaysia Berhad has a trailing yield of 4.4% on the current share price of RM08.24. 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! So we need to check whether the dividend payments are covered, and if earnings are growing.

Check out our latest analysis for Bursa Malaysia Berhad

Dividends are typically paid out of company income, so if a company pays out more than it earned, its dividend is usually at a higher risk of being cut. Last year, Bursa Malaysia Berhad paid out 94% of its income as dividends, which is above a level that we're comfortable with, especially if the company needs to reinvest in its business.

When a company pays out a dividend that is not well covered by profits, the dividend is generally seen as more vulnerable to being cut.

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 business enters a downturn and the dividend is cut, the company could see its value fall precipitously. For this reason, we're glad to see Bursa Malaysia Berhad's earnings per share have risen 11% per annum 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 past 10 years, Bursa Malaysia Berhad has increased its dividend at approximately 5.4% a year on average. Earnings per share have been growing much quicker than dividends, potentially because Bursa Malaysia Berhad is keeping back more of its profits to grow the business.

The Bottom Line

Is Bursa Malaysia Berhad worth buying for its dividend? Bursa Malaysia Berhad has been generating credible earnings per share growth, although its dividend payments were not adequately covered by earnings. It might be worth researching if the company is reinvesting in growth projects that could grow earnings and dividends in the future, but for now we're on the fence about its dividend prospects.

If you're not too concerned about Bursa Malaysia Berhad's ability to pay dividends, you should still be mindful of some of the other risks that this business faces. In terms of investment risks, we've identified 1 warning sign with Bursa Malaysia Berhad and understanding them should be part of your investment process.

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.