There's A Lot To Like About RCE Capital Berhad's (KLSE:RCECAP) Upcoming RM0.06 Dividend

Some investors rely on dividends for growing their wealth, and if you're one of those dividend sleuths, you might be intrigued to know that RCE Capital Berhad (KLSE:RCECAP) is about to go ex-dividend in just four days. You can purchase shares before the 24th of November in order to receive the dividend, which the company will pay on the 7th of December.

RCE Capital Berhad's next dividend payment will be RM0.06 per share. Last year, in total, the company distributed RM0.12 to shareholders. Looking at the last 12 months of distributions, RCE Capital Berhad has a trailing yield of approximately 5.3% on its current stock price of MYR2.26. 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! As a result, readers should always check whether RCE Capital Berhad has been able to grow its dividends, or if the dividend might be cut.

View our latest analysis for RCE Capital Berhad

If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. Fortunately RCE Capital Berhad's payout ratio is modest, at just 37% of profit.

Generally speaking, the lower a company's payout ratios, the more resilient its dividend usually is.

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

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. It's encouraging to see RCE Capital Berhad has grown its earnings rapidly, up 29% a year for the past 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, RCE Capital Berhad has increased its dividend at approximately 9.9% a year on average. It's encouraging to see the company lifting dividends while earnings are growing, suggesting at least some corporate interest in rewarding shareholders.

The Bottom Line

From a dividend perspective, should investors buy or avoid RCE Capital Berhad? Typically, companies that are growing rapidly and paying out a low fraction of earnings are keeping the profits for reinvestment in the business. This strategy can add significant value to shareholders over the long term - as long as it's done without issuing too many new shares. RCE Capital Berhad ticks a lot of boxes for us from a dividend perspective, and we think these characteristics should mark the company as deserving of further attention.

While it's tempting to invest in RCE Capital Berhad for the dividends alone, you should always be mindful of the risks involved. To that end, you should learn about the 3 warning signs we've spotted with RCE Capital Berhad (including 1 which can't be ignored).

If you're in the market for dividend stocks, we recommend checking our list of top dividend stocks with a greater than 2% yield and an upcoming dividend.

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This article by Simply Wall St is general in nature. 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.
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