Sime Darby Property Berhad (KLSE:SIMEPROP) Is About To Go Ex-Dividend, And It Pays A 2.3% Yield

Sime Darby Property Berhad (KLSE:SIMEPROP) is about to trade ex-dividend in the next three days. The ex-dividend date is two business days before a company's record date in most cases, which is the date on which the company determines which shareholders are entitled 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. This means that investors who purchase Sime Darby Property Berhad's shares on or after the 27th of March will not receive the dividend, which will be paid on the 23rd of April.

The company's upcoming dividend is RM00.015 a share, following on from the last 12 months, when the company distributed a total of RM0.03 per share to shareholders. Calculating the last year's worth of payments shows that Sime Darby Property Berhad has a trailing yield of 2.3% on the current share price of RM01.33. If you buy this business for its dividend, you should have an idea of whether Sime Darby Property Berhad's dividend is reliable and sustainable. As a result, readers should always check whether Sime Darby Property Berhad has been able to grow its dividends, or if the dividend might be cut.

Dividends are usually paid out of company profits, so if a company pays out more than it earned then its dividend is usually at greater risk of being cut. Fortunately Sime Darby Property Berhad's payout ratio is modest, at just 41% of profit. A useful secondary check can be to evaluate whether Sime Darby Property Berhad generated enough free cash flow to afford its dividend. Fortunately, it paid out only 45% of its free cash flow in the past year.

It's positive to see that Sime Darby Property 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.

See our latest analysis for Sime Darby Property Berhad

Click here to see the company's payout ratio, plus analyst estimates of its future dividends.

Have Earnings And Dividends Been Growing?

Companies with falling earnings are riskier for dividend shareholders. Investors love dividends, so if earnings fall and the dividend is reduced, expect a stock to be sold off heavily at the same time. That's why it's not ideal to see Sime Darby Property Berhad's earnings per share have been shrinking at 3.4% a year over the previous five years.

Many investors will assess a company's dividend performance by evaluating how much the dividend payments have changed over time. Sime Darby Property Berhad's dividend payments per share have declined at 4.0% per year on average over the past seven years, which is uninspiring. It's never nice to see earnings and dividends falling, but at least management has cut the dividend rather than potentially risk the company's health in an attempt to maintain it.

The Bottom Line

Is Sime Darby Property Berhad an attractive dividend stock, or better left on the shelf? Earnings per share are down meaningfully, although at least the company is paying out a low and conservative percentage of both its earnings and cash flow. It's definitely not great to see earnings falling, but at least there may be some buffer before the dividend needs to be cut. While it does have some good things going for it, we're a bit ambivalent and it would take more to convince us of Sime Darby Property Berhad's dividend merits.

With that in mind, a critical part of thorough stock research is being aware of any risks that stock currently faces. Case in point: We've spotted 1 warning sign for Sime Darby Property Berhad 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.