Is It Worth Considering Bursa Malaysia Berhad (KLSE:BURSA) For Its Upcoming Dividend?

Bursa Malaysia Berhad (KLSE:BURSA) stock is about to trade ex-dividend in 4 days. Typically, the ex-dividend date is two business days 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 important because any transaction on a stock needs to have been settled before the record date in order to be eligible for a dividend. Therefore, if you purchase Bursa Malaysia Berhad's shares on or after the 19th of August, you won't be eligible to receive the dividend, when it is paid on the 27th of August.

The company's next dividend payment will be RM00.14 per share, and in the last 12 months, the company paid a total of RM0.36 per share. Calculating the last year's worth of payments shows that Bursa Malaysia Berhad has a trailing yield of 4.7% on the current share price of RM07.72. 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 investigate whether Bursa Malaysia Berhad can afford its dividend, and if the dividend could grow.

We've found 21 US stocks that are forecast to pay a dividend yield of over 6% next year. See the full list for free.

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. Last year, Bursa Malaysia Berhad paid out 92% 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.

Generally, the higher a company's payout ratio, the more the dividend is at risk of being reduced.

See our latest analysis for Bursa Malaysia Berhad

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

Have Earnings And Dividends Been Growing?

Businesses with strong growth prospects usually make the best dividend payers, because it's easier to grow dividends when earnings per share are improving. Investors love dividends, so if earnings fall and the dividend is reduced, expect a stock to be sold off heavily at the same time. With that in mind, we're encouraged by the steady growth at Bursa Malaysia Berhad, with earnings per share up 8.5% on average over the last five years.

Many investors will assess a company's dividend performance by evaluating how much the dividend payments have changed over time. Bursa Malaysia Berhad's dividend payments are broadly unchanged compared to where they were 10 years ago.

To Sum It Up

Has Bursa Malaysia Berhad got what it takes to maintain its dividend payments? While we like that its earnings are growing somewhat, we're not enamored that it's paying out 92% of last year's earnings. This is not an overtly appealing combination of characteristics, and we're just not that interested in this company's dividend.

With that in mind though, if the poor dividend characteristics of Bursa Malaysia Berhad don't faze you, it's worth being mindful of the risks involved with this business. Our analysis shows 2 warning signs for Bursa Malaysia Berhad and you should be aware of these before buying any 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.