Stock Analysis

Dividend Investors: Don't Be Too Quick To Buy Matrix Concepts Holdings Berhad (KLSE:MATRIX) For Its Upcoming Dividend

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KLSE:MATRIX
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Some investors rely on dividends for growing their wealth, and if you're one of those dividend sleuths, you might be intrigued to know that Matrix Concepts Holdings Berhad (KLSE:MATRIX) is about to go ex-dividend in just four days. The ex-dividend date is usually set to be one business day 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 of consequence because whenever a stock is bought or sold, the trade takes at least two business day to settle. Thus, you can purchase Matrix Concepts Holdings Berhad's shares before the 13th of September in order to receive the dividend, which the company will pay on the 6th of October.

The company's next dividend payment will be RM0.03 per share, and in the last 12 months, the company paid a total of RM0.13 per share. Last year's total dividend payments show that Matrix Concepts Holdings Berhad has a trailing yield of 5.2% on the current share price of MYR2.39. If you buy this business for its dividend, you should have an idea of whether Matrix Concepts Holdings Berhad's dividend is reliable and sustainable. That's why we should always check whether the dividend payments appear sustainable, and if the company is growing.

Check out our latest analysis for Matrix Concepts Holdings Berhad

If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. Matrix Concepts Holdings Berhad paid out more than half (51%) of its earnings last year, which is a regular payout ratio for most companies. Yet cash flows are even more important than profits for assessing a dividend, so we need to see if the company generated enough cash to pay its distribution. Over the past year it paid out 114% of its free cash flow as dividends, which is uncomfortably high. We're curious about why the company paid out more cash than it generated last year, since this can be one of the early signs that a dividend may be unsustainable.

While Matrix Concepts Holdings Berhad's dividends were covered by the company's reported profits, cash is somewhat more important, so it's not great to see that the company didn't generate enough cash to pay its dividend. Cash is king, as they say, and were Matrix Concepts Holdings Berhad to repeatedly pay dividends that aren't well covered by cashflow, we would consider this a warning sign.

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

historic-dividend
KLSE:MATRIX Historic Dividend September 8th 2022

Have Earnings And Dividends Been Growing?

Stocks with flat earnings can still be attractive dividend payers, but it is important to be more conservative with your approach and demand a greater margin for safety when it comes to dividend sustainability. Investors love dividends, so if earnings fall and the dividend is reduced, expect a stock to be sold off heavily at the same time. It's not encouraging to see that Matrix Concepts Holdings Berhad's earnings are effectively flat over the past five years. It's better than seeing them drop, certainly, but over the long term, all of the best dividend stocks are able to meaningfully grow their earnings per share. Earnings have been growing somewhat, but we're concerned dividend payments consumed most of the company's cash flow over the past year.

Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. It looks like the Matrix Concepts Holdings Berhad dividends are largely the same as they were nine years ago.

The Bottom Line

Has Matrix Concepts Holdings Berhad got what it takes to maintain its dividend payments? In addition to earnings being flat, Matrix Concepts Holdings Berhad is paying out a reasonable percentage of its earnings as profits. However, the dividend was not well covered by free cash flow. Overall it doesn't look like the most suitable dividend stock for a long-term buy and hold investor.

With that being said, if you're still considering Matrix Concepts Holdings Berhad as an investment, you'll find it beneficial to know what risks this stock is facing. To help with this, we've discovered 1 warning sign for Matrix Concepts Holdings 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.

Valuation is complex, but we're helping make it simple.

Find out whether Matrix Concepts Holdings Berhad is potentially over or undervalued by checking out our comprehensive analysis, which includes fair value estimates, risks and warnings, dividends, insider transactions and financial health.

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About KLSE:MATRIX

Matrix Concepts Holdings Berhad

Matrix Concepts Holdings Berhad engages in the property development, construction, education, hospitality, and healthcare businesses primarily in Malaysia, Australia, and Indonesia.

The Snowflake is a visual investment summary with the score of each axis being calculated by 6 checks in 5 areas.

Analysis AreaScore (0-6)
Valuation3
Future Growth2
Past Performance3
Financial Health6
Dividends3

Read more about these checks in the individual report sections or in our analysis model.

Flawless balance sheet and fair value.