Read This Before Considering Uchi Technologies Berhad (KLSE:UCHITEC) For Its Upcoming RM00.045 Dividend

It looks like Uchi Technologies Berhad (KLSE:UCHITEC) is about to go ex-dividend in the next 4 days. The ex-dividend date is commonly two business days 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. Thus, you can purchase Uchi Technologies Berhad's shares before the 8th of September in order to receive the dividend, which the company will pay on the 25th of September.

The company's next dividend payment will be RM00.045 per share, on the back of last year when the company paid a total of RM0.24 to shareholders. Calculating the last year's worth of payments shows that Uchi Technologies Berhad has a trailing yield of 7.3% on the current share price of RM03.35. Dividends are an important source of income to many shareholders, but the health of the business is crucial to maintaining those dividends. That's why we should always check whether the dividend payments appear sustainable, and if the company is growing.

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If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. That's why it's good to see Uchi Technologies Berhad paying out a modest 49% of its earnings. Yet cash flow is typically more important than profit for assessing dividend sustainability, so we should always check if the company generated enough cash to afford its dividend. Uchi Technologies Berhad paid out more free cash flow than it generated - 151%, to be precise - last year, which we think is concerningly high. It's hard to consistently pay out more cash than you generate without either borrowing or using company cash, so we'd wonder how the company justifies this payout level.

While Uchi Technologies 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. Were this to happen repeatedly, this would be a risk to Uchi Technologies Berhad's ability to maintain its dividend.

See our latest analysis for Uchi Technologies 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 consistently growing earnings per share generally make the best dividend stocks, as they usually find it easier to grow dividends per share. If earnings decline and the company is forced to cut its dividend, investors could watch the value of their investment go up in smoke. This is why it's a relief to see Uchi Technologies Berhad earnings per share are up 3.6% per annum over the last five years. Earnings have been growing somewhat, but we're concerned dividend payments consumed most of the company's cash flow over the past year.

The main way most investors will assess a company's dividend prospects is by checking the historical rate of dividend growth. Uchi Technologies Berhad has delivered 9.4% 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.

Final Takeaway

Is Uchi Technologies Berhad an attractive dividend stock, or better left on the shelf? Uchi Technologies Berhad delivered reasonable earnings per share growth in recent times, and paid out less than half its profits and 151% of its cash flow over the last year, which is a mediocre outcome. To summarise, Uchi Technologies Berhad looks okay on this analysis, although it doesn't appear a stand-out opportunity.

So if you want to do more digging on Uchi Technologies Berhad, you'll find it worthwhile knowing the risks that this stock faces. To help with this, we've discovered 1 warning sign for Uchi Technologies Berhad that you should be aware of before investing in their shares.

If you're in the market for strong dividend payers, we recommend checking our selection of top 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.