Heineken Malaysia Berhad (KLSE:HEIM) Stock Goes Ex-Dividend In Just Four Days

June 24, 2022
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Heineken Malaysia Berhad (KLSE:HEIM) stock is about to trade ex-dividend in 4 days. The ex-dividend date is one business day before the record date, which is the cut-off date for shareholders to be present on the company's books to be eligible for a dividend payment. The ex-dividend date is important as the process of settlement involves two full business days. So if you miss that date, you would not show up on the company's books on the record date. Accordingly, Heineken Malaysia Berhad investors that purchase the stock on or after the 29th of June will not receive the dividend, which will be paid on the 28th of July.

The company's next dividend payment will be RM0.66 per share, and in the last 12 months, the company paid a total of RM0.81 per share. Looking at the last 12 months of distributions, Heineken Malaysia Berhad has a trailing yield of approximately 3.3% on its current stock price of MYR24.28. Dividends are an important source of income to many shareholders, but the health of the business is crucial to maintaining those dividends. So we need to investigate whether Heineken Malaysia Berhad can afford its dividend, and if the dividend could grow.

View our latest analysis for Heineken Malaysia Berhad

If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. Its dividend payout ratio is 86% of profit, which means the company is paying out a majority of its earnings. The relatively limited profit reinvestment could slow the rate of future earnings growth. We'd be concerned if earnings began to decline. That said, even highly profitable companies sometimes might not generate enough cash to pay the dividend, which is why we should always check if the dividend is covered by cash flow. Dividends consumed 73% of the company's free cash flow last year, which is within a normal range for most dividend-paying organisations.

It's encouraging to see that the dividend is covered by both profit and cash flow. This generally suggests the dividend is sustainable, as long as earnings don't drop precipitously.

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

KLSE:HEIM Historic Dividend June 24th 2022

Have Earnings And Dividends Been Growing?

Companies that aren't growing their earnings can still be valuable, but it is even more important to assess the sustainability of the dividend if it looks like the company will struggle to grow. If earnings decline and the company is forced to cut its dividend, investors could watch the value of their investment go up in smoke. That explains why we're not overly excited about Heineken Malaysia Berhad's flat earnings over the past five years. Better than seeing them fall off a cliff, for sure, but the best dividend stocks grow their earnings meaningfully over the long run. A high payout ratio of 86% generally happens when a company can't find better uses for the cash. Combined with slim earnings growth in the past few years, Heineken Malaysia Berhad could be signalling that its future growth prospects are thin.

Many investors will assess a company's dividend performance by evaluating how much the dividend payments have changed over time. Since the start of our data, 10 years ago, Heineken Malaysia Berhad has lifted its dividend by approximately 4.1% a year on average.

Final Takeaway

Has Heineken Malaysia Berhad got what it takes to maintain its dividend payments? Heineken Malaysia Berhad has struggled to grow its earnings per share, and while the company is paying out a majority of its earnings and cash flow in the form of dividends, the dividend payments don't appear unsustainable. Overall we're not hugely bearish on the stock, but there are likely better dividend investments out there.

However if you're still interested in Heineken Malaysia Berhad as a potential investment, you should definitely consider some of the risks involved with Heineken Malaysia Berhad. Every company has risks, and we've spotted 1 warning sign for Heineken Malaysia Berhad you should know about.

If you're in the market for strong dividend payers, we recommend checking our selection of top dividend stocks.

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