KSL Holdings Berhad (KLSE:KSL) Could Be A Buy For Its Upcoming Dividend

Regular readers will know that we love our dividends at Simply Wall St, which is why it's exciting to see KSL Holdings Berhad (KLSE:KSL) is about to trade ex-dividend in the next four days. Typically, the ex-dividend date is two business days before the record date, which is the date on which a company determines the shareholders eligible to receive a 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. Accordingly, KSL Holdings Berhad investors that purchase the stock on or after the 14th of July will not receive the dividend, which will be paid on the 12th of August.

The company's upcoming dividend is RM00.08 a share, following on from the last 12 months, when the company distributed a total of RM0.08 per share to shareholders. Calculating the last year's worth of payments shows that KSL Holdings Berhad has a trailing yield of 4.7% on the current share price of RM01.69. 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 KSL Holdings Berhad has been able to grow its dividends, or if the dividend might be cut.

We've found 21 US stocks that are forecast to pay a dividend yield of over 6% next year. See the full list for free.

If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. KSL Holdings Berhad paid out just 19% of its profit last year, which we think is conservatively low and leaves plenty of margin for unexpected circumstances. KSL Holdings Berhad paid a dividend despite reporting negative free cash flow over the last twelve months. This may be due to heavy investment in the business, but this is still suboptimal from a dividend sustainability perspective.

View our latest analysis for KSL Holdings Berhad

Click here to see how much of its profit KSL Holdings 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, KSL Holdings Berhad's earnings per share have been growing at 11% a year for the past five years.

Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. KSL Holdings Berhad has delivered 4.8% dividend growth per year on average over the past 10 years. Earnings per share have been growing much quicker than dividends, potentially because KSL Holdings Berhad is keeping back more of its profits to grow the business.

To Sum It Up

Should investors buy KSL Holdings Berhad for the upcoming dividend? Companies like KSL Holdings Berhad that are growing rapidly and paying out a low fraction of earnings, are usually reinvesting heavily in their business. Perhaps even more importantly - this can sometimes signal management is focused on the long term future of the business. We think this is a pretty attractive combination, and would be interested in investigating KSL Holdings Berhad more closely.

So while KSL Holdings Berhad looks good from a dividend perspective, it's always worthwhile being up to date with the risks involved in this stock. To that end, you should learn about the 2 warning signs we've spotted with KSL Holdings Berhad (including 1 which is potentially serious).

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.