Why You Might Be Interested In SkyWorld Development Berhad (KLSE:SKYWLD) For Its Upcoming Dividend

SkyWorld Development Berhad (KLSE:SKYWLD) is about to trade ex-dividend in the next day or two. 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 important as the process of settlement involves two full business days. So if you miss that date, you would not show up on the company's books on the record date. Meaning, you will need to purchase SkyWorld Development Berhad's shares before the 2nd of January to receive the dividend, which will be paid on the 15th of January.

The company's next dividend payment will be RM0.013 per share. If you buy this business for its dividend, you should have an idea of whether SkyWorld Development Berhad's dividend is reliable and sustainable. As a result, readers should always check whether SkyWorld Development Berhad has been able to grow its dividends, or if the dividend might be cut.

Check out our latest analysis for SkyWorld Development Berhad

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. SkyWorld Development Berhad paid out just 16% of its profit last year, which we think is conservatively low and leaves plenty of margin for unexpected circumstances. SkyWorld Development Berhad paid a dividend despite reporting negative free cash flow last year. That's typically a bad combination and - if this were more than a one-off - not sustainable.

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. 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, SkyWorld Development Berhad's earnings per share have been growing at 10% a year for the past three years.

This is SkyWorld Development Berhad's first year of paying a dividend, so it doesn't have much of a history yet to compare to.

The Bottom Line

Has SkyWorld Development Berhad got what it takes to maintain its dividend payments? Companies like SkyWorld Development 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. In summary, SkyWorld Development Berhad appears to have some promise as a dividend stock, and we'd suggest taking a closer look at it.

So while SkyWorld Development Berhad looks good from a dividend perspective, it's always worthwhile being up to date with the risks involved in this stock. To help with this, we've discovered 2 warning signs for SkyWorld Development Berhad (1 is a bit concerning!) that you ought to be aware of before buying the 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.