Do These 3 Checks Before Buying Pantech Global Berhad (KLSE:PGLOBAL) For Its Upcoming Dividend

Pantech Global Berhad (KLSE:PGLOBAL) is about to trade ex-dividend in the next 3 days. The ex-dividend date is usually set to be two business days 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. The ex-dividend date is important because any transaction on a stock needs to have been settled before the record date in order to be eligible for a dividend. Meaning, you will need to purchase Pantech Global Berhad's shares before the 27th of November to receive the dividend, which will be paid on the 19th of December.

The company's upcoming dividend is RM00.02 a share, following on from the last 12 months, when the company distributed a total of RM0.04 per share to shareholders. Based on the last year's worth of payments, Pantech Global Berhad stock has a trailing yield of around 8.2% on the current share price of RM00.485. 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 Pantech Global Berhad has been able to grow its dividends, or if the dividend might be cut.

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Dividends are typically paid from company earnings. If a company pays more in dividends than it earned in profit, then the dividend could be unsustainable. Pantech Global Berhad is paying out an acceptable 62% of its profit, a common payout level among most companies. A useful secondary check can be to evaluate whether Pantech Global Berhad generated enough free cash flow to afford its dividend.

View our latest analysis for Pantech Global Berhad

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

Have Earnings And Dividends Been Growing?

Companies with falling earnings are riskier for dividend shareholders. If business enters a downturn and the dividend is cut, the company could see its value fall precipitously. With that in mind, we're discomforted by Pantech Global Berhad's 19% per annum decline in earnings in the past five years. Such a sharp decline casts doubt on the future sustainability of the dividend.

Pantech Global Berhad also issued more than 5% of its market cap in new stock during the past year, which we feel is likely to hurt its dividend prospects in the long run. It's hard to grow dividends per share when a company keeps creating new shares.

Unfortunately Pantech Global Berhad has only been paying a dividend for a year or so, so there's not much of a history to draw insight from.

Final Takeaway

Is Pantech Global Berhad an attractive dividend stock, or better left on the shelf? Pantech Global Berhad had an average payout ratio, but its free cash flow was lower and earnings per share have been declining. It's not that we think Pantech Global Berhad is a bad company, but these characteristics don't generally lead to outstanding dividend performance.

Although, if you're still interested in Pantech Global Berhad and want to know more, you'll find it very useful to know what risks this stock faces. For instance, we've identified 3 warning signs for Pantech Global Berhad (1 can't be ignored) you should be aware of.

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.

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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.