Lysaght Galvanized Steel Berhad (KLSE:LYSAGHT) Passed Our Checks, And It's About To Pay A RM00.05 Dividend

It looks like Lysaght Galvanized Steel Berhad (KLSE:LYSAGHT) is about to go ex-dividend in the next 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 of consequence because whenever a stock is bought or sold, the trade takes at least two business day to settle. Thus, you can purchase Lysaght Galvanized Steel Berhad's shares before the 3rd of July in order to receive the dividend, which the company will pay on the 24th of July.

The company's next dividend payment will be RM00.05 per share, on the back of last year when the company paid a total of RM0.10 to shareholders. Last year's total dividend payments show that Lysaght Galvanized Steel Berhad has a trailing yield of 3.5% on the current share price of RM02.82. Dividends are a major contributor to investment returns for long term holders, but only if the dividend continues to be paid. As a result, readers should always check whether Lysaght Galvanized Steel Berhad has been able to grow its dividends, or if the dividend might be cut.

See our latest analysis for Lysaght Galvanized Steel Berhad

If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. That's why it's good to see Lysaght Galvanized Steel Berhad paying out a modest 27% of its earnings. 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. What's good is that dividends were well covered by free cash flow, with the company paying out 12% of its cash flow last year.

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 how much of its profit Lysaght Galvanized Steel Berhad paid out over the last 12 months.

Have Earnings And Dividends Been Growing?

Companies with consistently growing earnings per share generally make the best dividend stocks, as they usually find it easier to grow dividends per share. If earnings fall far enough, the company could be forced to cut its dividend. This is why it's a relief to see Lysaght Galvanized Steel Berhad earnings per share are up 5.7% per annum over the last five years. The company is retaining more than half of its earnings within the business, and it has been growing earnings at a decent rate. We think this is generally an attractive combination, as dividends can grow through a combination of earnings growth and or a higher payout ratio over time.

Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. Lysaght Galvanized Steel Berhad's dividend payments per share have declined at 1.8% per year on average over the past 10 years, which is uninspiring.

The Bottom Line

Is Lysaght Galvanized Steel Berhad an attractive dividend stock, or better left on the shelf? Earnings per share have been growing moderately, and Lysaght Galvanized Steel Berhad is paying out less than half its earnings and cash flow as dividends, which is an attractive combination as it suggests the company is investing in growth. It might be nice to see earnings growing faster, but Lysaght Galvanized Steel Berhad is being conservative with its dividend payouts and could still perform reasonably over the long run. There's a lot to like about Lysaght Galvanized Steel Berhad, and we would prioritise taking a closer look at it.

While it's tempting to invest in Lysaght Galvanized Steel Berhad for the dividends alone, you should always be mindful of the risks involved. For example - Lysaght Galvanized Steel Berhad has 2 warning signs we think you should be aware of.

A common investing mistake is buying the first interesting stock you see. Here you can find a full list of high-yield 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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com