NTPM Holdings Berhad (KLSE:NTPM) Stock Goes Ex-Dividend In Just Four Days

Regular readers will know that we love our dividends at Simply Wall St, which is why it's exciting to see NTPM Holdings Berhad (KLSE:NTPM) is about to trade ex-dividend in the next four days. You can purchase shares before the 5th of January in order to receive the dividend, which the company will pay on the 22nd of January.

NTPM Holdings Berhad's next dividend payment will be RM0.008 per share, and in the last 12 months, the company paid a total of RM0.016 per share. Last year's total dividend payments show that NTPM Holdings Berhad has a trailing yield of 2.1% on the current share price of MYR0.76. 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 NTPM Holdings Berhad can afford its dividend, and if the dividend could grow.

Check out our latest analysis for NTPM Holdings Berhad

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. Fortunately NTPM Holdings Berhad's payout ratio is modest, at just 25% of profit. Yet cash flows are even more important than profits for assessing a dividend, so we need to see if the company generated enough cash to pay its distribution. Thankfully its dividend payments took up just 47% of the free cash flow it generated, which is a comfortable payout ratio.

It's positive to see that NTPM Holdings 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 how much of its profit NTPM Holdings Berhad paid out over the last 12 months.

Have Earnings And Dividends Been Growing?

When earnings decline, dividend companies become much harder to analyse and own safely. If business enters a downturn and the dividend is cut, the company could see its value fall precipitously. That's why it's not ideal to see NTPM Holdings Berhad's earnings per share have been shrinking at 3.6% a year over the previous five years.

The main way most investors will assess a company's dividend prospects is by checking the historical rate of dividend growth. NTPM Holdings Berhad's dividend payments per share have declined at 5.8% per year on average over the past 10 years, which is uninspiring. While it's not great that earnings and dividends per share have fallen in recent years, we're encouraged by the fact that management has trimmed the dividend rather than risk over-committing the company in a risky attempt to maintain yields to shareholders.

To Sum It Up

Should investors buy NTPM Holdings Berhad for the upcoming dividend? NTPM Holdings Berhad has comfortably low cash and profit payout ratios, which may mean the dividend is sustainable even in the face of a sharp decline in earnings per share. Still, we consider declining earnings to be a warning sign. In summary, while it has some positive characteristics, we're not inclined to race out and buy NTPM Holdings Berhad today.

With that in mind, a critical part of thorough stock research is being aware of any risks that stock currently faces. For example - NTPM Holdings Berhad has 3 warning signs we think you should be aware of.

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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