Four Days Left To Buy Ta Ann Holdings Berhad (KLSE:TAANN) Before The Ex-Dividend Date

Ta Ann Holdings Berhad (KLSE:TAANN) is about to trade ex-dividend in the next 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 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. Therefore, if you purchase Ta Ann Holdings Berhad's shares on or after the 9th of December, you won't be eligible to receive the dividend, when it is paid on the 31st of December.

The company's next dividend payment will be RM00.10 per share. Last year, in total, the company distributed RM0.40 to shareholders. Based on the last year's worth of payments, Ta Ann Holdings Berhad stock has a trailing yield of around 9.3% on the current share price of RM04.29. If you buy this business for its dividend, you should have an idea of whether Ta Ann Holdings Berhad's dividend is reliable and sustainable. So we need to investigate whether Ta Ann Holdings Berhad can afford its dividend, and if the dividend could grow.

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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. Ta Ann Holdings Berhad is paying out an acceptable 71% of its profit, a common payout level among most companies. 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 71% 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.

View our latest analysis for Ta Ann Holdings Berhad

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 fall far enough, the company could be forced to cut its dividend. It's encouraging to see Ta Ann Holdings Berhad has grown its earnings rapidly, up 28% a year for the past five years. The current payout ratio suggests a good balance between rewarding shareholders with dividends, and reinvesting in growth. With a reasonable payout ratio, profits being reinvested, and some earnings growth, Ta Ann Holdings Berhad could have strong prospects for future increases to the dividend.

Many investors will assess a company's dividend performance by evaluating how much the dividend payments have changed over time. In the last 10 years, Ta Ann Holdings Berhad has lifted its dividend by approximately 9.1% 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 Ta Ann Holdings Berhad an attractive dividend stock, or better left on the shelf? It's good to see earnings are growing, since all of the best dividend stocks grow their earnings meaningfully over the long run. That's why we're glad to see Ta Ann Holdings Berhad's earnings per share growing, although as we saw, the company is paying out more than half of its earnings and cashflow - 71% and 71% respectively. While it does have some good things going for it, we're a bit ambivalent and it would take more to convince us of Ta Ann Holdings Berhad's dividend merits.

While it's tempting to invest in Ta Ann Holdings Berhad for the dividends alone, you should always be mindful of the risks involved. In terms of investment risks, we've identified 1 warning sign with Ta Ann Holdings Berhad and understanding them should be part of your investment process.

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