Interested In Scientex Packaging (Ayer Keroh) Berhad's (KLSE:SCIPACK) Upcoming RM00.05 Dividend? You Have Three Days Left

It looks like Scientex Packaging (Ayer Keroh) Berhad (KLSE:SCIPACK) is about to go ex-dividend in the next three 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 an important date to be aware of as any purchase of the stock made on or after this date might mean a late settlement that doesn't show on the record date. This means that investors who purchase Scientex Packaging (Ayer Keroh) Berhad's shares on or after the 3rd of January will not receive the dividend, which will be paid on the 14th of January.

The company's next dividend payment will be RM00.05 per share. Last year, in total, the company distributed RM0.10 to shareholders. Calculating the last year's worth of payments shows that Scientex Packaging (Ayer Keroh) Berhad has a trailing yield of 5.2% on the current share price of RM01.94. Dividends are a major contributor to investment returns for long term holders, but only if the dividend continues to be paid. That's why we should always check whether the dividend payments appear sustainable, and if the company is growing.

See our latest analysis for Scientex Packaging (Ayer Keroh) Berhad

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. Last year, Scientex Packaging (Ayer Keroh) Berhad paid out 95% of its income as dividends, which is above a level that we're comfortable with, especially if the company needs to reinvest in its business. 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. Over the last year it paid out 74% of its free cash flow as dividends, within the usual range for most companies.

It's good to see that while Scientex Packaging (Ayer Keroh) Berhad's dividends were not well covered by profits, at least they are affordable from a cash perspective. Still, if the company continues paying out such a high percentage of its profits, the dividend could be at risk if business turns sour.

Click here to see how much of its profit Scientex Packaging (Ayer Keroh) Berhad paid out over the last 12 months.

Have Earnings And Dividends Been Growing?

Stocks in companies that generate sustainable earnings growth often make the best dividend prospects, as it is easier to lift the dividend when earnings are rising. Investors love dividends, so if earnings fall and the dividend is reduced, expect a stock to be sold off heavily at the same time. Fortunately for readers, Scientex Packaging (Ayer Keroh) Berhad's earnings per share have been growing at 19% a year for the past five years.

The main way most investors will assess a company's dividend prospects is by checking the historical rate of dividend growth. Scientex Packaging (Ayer Keroh) Berhad has delivered 6.7% dividend growth per year on average over the past 10 years. We're glad to see dividends rising alongside earnings over a number of years, which may be a sign the company intends to share the growth with shareholders.

To Sum It Up

Should investors buy Scientex Packaging (Ayer Keroh) Berhad for the upcoming dividend? Growing earnings per share and a normal cashflow payout ratio is an ok combination, but we're concerned that the company is paying out such a high percentage of its income as dividends. All things considered, we are not particularly enthused about Scientex Packaging (Ayer Keroh) Berhad from a dividend perspective.

With that being said, if dividends aren't your biggest concern with Scientex Packaging (Ayer Keroh) Berhad, you should know about the other risks facing this business. To help with this, we've discovered 2 warning signs for Scientex Packaging (Ayer Keroh) Berhad that you should be aware of before investing in their shares.

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.