Stock Analysis

Should Income Investors Look At MNRB Holdings Berhad (KLSE:MNRB) Before Its Ex-Dividend?

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KLSE:MNRB
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Readers hoping to buy MNRB Holdings Berhad (KLSE:MNRB) for its dividend will need to make their move shortly, as the stock is about to trade ex-dividend. 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 of consequence because whenever a stock is bought or sold, the trade takes at least two business day to settle. In other words, investors can purchase MNRB Holdings Berhad's shares before the 7th of October in order to be eligible for the dividend, which will be paid on the 31st of October.

The company's upcoming dividend is RM0.025 a share, following on from the last 12 months, when the company distributed a total of RM0.025 per share to shareholders. Last year's total dividend payments show that MNRB Holdings Berhad has a trailing yield of 2.7% on the current share price of MYR0.94. If you buy this business for its dividend, you should have an idea of whether MNRB Holdings Berhad's dividend is reliable and sustainable. So we need to investigate whether MNRB Holdings Berhad can afford its dividend, and if the dividend could grow.

See our latest analysis for MNRB 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 MNRB Holdings Berhad's payout ratio is modest, at just 36% of profit.

Companies that pay out less in dividends than they earn in profits generally have more sustainable dividends. The lower the payout ratio, the more wiggle room the business has before it could be forced to cut the dividend.

Click here to see how much of its profit MNRB Holdings Berhad paid out over the last 12 months.

historic-dividend
KLSE:MNRB Historic Dividend October 3rd 2022

Have Earnings And Dividends Been Growing?

Companies with falling earnings are riskier for dividend shareholders. Investors love dividends, so if earnings fall and the dividend is reduced, expect a stock to be sold off heavily at the same time. MNRB Holdings Berhad's earnings per share have fallen at approximately 24% a year over the previous five years. Such a sharp decline casts doubt on the future sustainability of the dividend.

Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. MNRB Holdings Berhad's dividend payments per share have declined at 14% per year on average over the past 10 years, which is uninspiring. It's never nice to see earnings and dividends falling, but at least management has cut the dividend rather than potentially risk the company's health in an attempt to maintain it.

The Bottom Line

Should investors buy MNRB Holdings Berhad for the upcoming dividend? Earnings per share have shrunk noticeably in recent years, although we like that the company has a low payout ratio. This could suggest a cut to the dividend may not be a major risk in the near future. We think there are likely better opportunities out there.

If you're not too concerned about MNRB Holdings Berhad's ability to pay dividends, you should still be mindful of some of the other risks that this business faces. For example, we've found 2 warning signs for MNRB Holdings Berhad that we recommend you consider before investing in the business.

Generally, we wouldn't recommend just buying the first dividend stock you see. Here's a curated list of interesting stocks that are strong dividend payers.

Valuation is complex, but we're helping make it simple.

Find out whether MNRB Holdings Berhad is potentially over or undervalued by checking out our comprehensive analysis, which includes fair value estimates, risks and warnings, dividends, insider transactions and financial health.

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About KLSE:MNRB

MNRB Holdings Berhad

MNRB Holdings Berhad, an investment holding company, engages in the general reinsurance, takaful, and retakaful businesses in Malaysia and internationally.

The Snowflake is a visual investment summary with the score of each axis being calculated by 6 checks in 5 areas.

Analysis AreaScore (0-6)
Valuation2
Future Growth3
Past Performance1
Financial Health5
Dividends3

Read more about these checks in the individual report sections or in our analysis model.

Excellent balance sheet with moderate growth potential.