TSH Resources Berhad (KLSE:TSH) Looks Like A Good Stock, And It's Going Ex-Dividend Soon

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 TSH Resources Berhad (KLSE:TSH) is about to go ex-dividend in just three days. You can purchase shares before the 12th of March in order to receive the dividend, which the company will pay on the 1st of April.

TSH Resources Berhad's next dividend payment will be RM0.015 per share, and in the last 12 months, the company paid a total of RM0.015 per share. Calculating the last year's worth of payments shows that TSH Resources Berhad has a trailing yield of 1.4% on the current share price of MYR1.06. If you buy this business for its dividend, you should have an idea of whether TSH Resources Berhad's dividend is reliable and sustainable. So we need to investigate whether TSH Resources Berhad can afford its dividend, and if the dividend could grow.

View our latest analysis for TSH Resources Berhad

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. TSH Resources Berhad paid out a comfortable 34% of its profit last year. 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. It paid out 7.6% of its free cash flow as dividends last year, which is conservatively low.

It's positive to see that TSH Resources Berhad's dividend is covered by both profits and cash flow, since this is generally a sign that the dividend is sustainable, and a lower payout ratio usually suggests a greater margin of safety before the dividend gets cut.

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. If earnings fall far enough, the company could be forced to cut its dividend. That's why it's comforting to see TSH Resources Berhad's earnings have been skyrocketing, up 32% per annum for the past five years. TSH Resources Berhad is paying out less than half its earnings and cash flow, while simultaneously growing earnings per share at a rapid clip. This is a very favourable combination that can often lead to the dividend multiplying over the long term, if earnings grow and the company pays out a higher percentage of its earnings.

Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. TSH Resources Berhad's dividend payments per share have declined at 1.1% per year on average over the past 10 years, which is uninspiring.

Final Takeaway

From a dividend perspective, should investors buy or avoid TSH Resources Berhad? TSH Resources Berhad has grown its earnings per share while simultaneously reinvesting in the business. Unfortunately it's cut the dividend at least once in the past 10 years, but the conservative payout ratio makes the current dividend look sustainable. It's a promising combination that should mark this company worthy of closer attention.

While it's tempting to invest in TSH Resources Berhad for the dividends alone, you should always be mindful of the risks involved. Case in point: We've spotted 1 warning sign for TSH Resources Berhad you should be aware of.

We wouldn't recommend just buying the first dividend stock you see, though. Here's a list of interesting 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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