Why You Might Be Interested In Master-Pack Group Berhad (KLSE:MASTER) For Its Upcoming Dividend
Master-Pack Group Berhad (KLSE:MASTER) is about to trade ex-dividend in the next 4 days. Typically, the ex-dividend date is one business day before the record date which is the date on which a company determines the shareholders eligible to receive a dividend. It is important to be aware of the ex-dividend date because any trade on the stock needs to have been settled on or before the record date. Thus, you can purchase Master-Pack Group Berhad's shares before the 19th of September in order to receive the dividend, which the company will pay on the 12th of October.
The company's next dividend payment will be RM0.06 per share. Last year, in total, the company distributed RM0.12 to shareholders. Calculating the last year's worth of payments shows that Master-Pack Group Berhad has a trailing yield of 4.5% on the current share price of MYR2.65. 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! We need to see whether the dividend is covered by earnings and if it's growing.
See our latest analysis for Master-Pack Group Berhad
If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. Fortunately Master-Pack Group Berhad's payout ratio is modest, at just 27% of profit. Yet cash flow is typically more important than profit for assessing dividend sustainability, so we should always check if the company generated enough cash to afford its dividend. Fortunately, it paid out only 35% of its free cash flow in the past 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 Master-Pack Group Berhad paid out over the last 12 months.
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 business enters a downturn and the dividend is cut, the company could see its value fall precipitously. It's encouraging to see Master-Pack Group Berhad has grown its earnings rapidly, up 43% a year for the past five years. Master-Pack Group Berhad is paying out less than half its earnings and cash flow, while simultaneously growing earnings per share at a rapid clip. Companies with growing earnings and low payout ratios are often the best long-term dividend stocks, as the company can both grow its earnings and increase the percentage of earnings that it pays out, essentially multiplying the dividend.
The main way most investors will assess a company's dividend prospects is by checking the historical rate of dividend growth. Master-Pack Group Berhad has delivered 20% dividend growth per year on average over the past 10 years. It's exciting to see that both earnings and dividends per share have grown rapidly over the past few years.
Final Takeaway
Has Master-Pack Group Berhad got what it takes to maintain its dividend payments? Master-Pack Group 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. Master-Pack Group Berhad looks solid on this analysis overall, and we'd definitely consider investigating it more closely.
So while Master-Pack Group Berhad looks good from a dividend perspective, it's always worthwhile being up to date with the risks involved in this stock. Case in point: We've spotted 2 warning signs for Master-Pack Group Berhad you should be aware of.
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.
About KLSE:MASTER
Master-Pack Group Berhad
An investment holding company, manufactures, distributes, and sells corrugated cartons and wooden packaging materials in Malaysia, Vietnam, and internationally.
Flawless balance sheet established dividend payer.
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