Three Days Left To Buy PETRONAS Chemicals Group Berhad (KLSE:PCHEM) Before The Ex-Dividend Date

Readers hoping to buy PETRONAS Chemicals Group Berhad (KLSE:PCHEM) for its dividend will need to make their move shortly, as the stock is about to trade ex-dividend. The ex-dividend date is usually set to be one business day before the record date which is the cut-off date on which you must be present on the company's books as a shareholder in order to receive the 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. Accordingly, PETRONAS Chemicals Group Berhad investors that purchase the stock on or after the 10th of March will not receive the dividend, which will be paid on the 23rd of March.

The company's next dividend payment will be RM0.16 per share, on the back of last year when the company paid a total of RM0.50 to shareholders. Looking at the last 12 months of distributions, PETRONAS Chemicals Group Berhad has a trailing yield of approximately 5.6% on its current stock price of MYR7.26. 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! As a result, readers should always check whether PETRONAS Chemicals Group Berhad has been able to grow its dividends, or if the dividend might be cut.

Check out our latest analysis for PETRONAS Chemicals Group Berhad

Dividends are typically paid out of company income, so if a company pays out more than it earned, its dividend is usually at a higher risk of being cut. PETRONAS Chemicals Group Berhad is paying out an acceptable 52% of its profit, a common payout level among most companies. 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. It paid out more than half (62%) of its free cash flow in the past year, which is within an average range for most companies.

It's positive to see that PETRONAS Chemicals Group 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 business enters a downturn and the dividend is cut, the company could see its value fall precipitously. With that in mind, we're encouraged by the steady growth at PETRONAS Chemicals Group Berhad, with earnings per share up 8.6% on average over the last five years. While earnings have been growing at a credible rate, the company is paying out a majority of its earnings to shareholders. Therefore it's unlikely that the company will be able to reinvest heavily in its business, which could presage slower growth in the future.

Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. Since the start of our data, 10 years ago, PETRONAS Chemicals Group Berhad has lifted its dividend by approximately 9.9% a year on average. It's encouraging to see the company lifting dividends while earnings are growing, suggesting at least some corporate interest in rewarding shareholders.

Final Takeaway

Has PETRONAS Chemicals Group Berhad got what it takes to maintain its dividend payments? Earnings per share have been growing modestly and PETRONAS Chemicals Group Berhad paid out a bit over half of its earnings and free cash flow last year. To summarise, PETRONAS Chemicals Group Berhad looks okay on this analysis, although it doesn't appear a stand-out opportunity.

With that being said, if dividends aren't your biggest concern with PETRONAS Chemicals Group Berhad, you should know about the other risks facing this business. To that end, you should learn about the 3 warning signs we've spotted with PETRONAS Chemicals Group Berhad (including 1 which shouldn't be ignored).

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.