Malaysia Airports Holdings Berhad (KLSE:AIRPORT) Goes Ex-Dividend Soon

Malaysia Airports Holdings Berhad (KLSE:AIRPORT) stock is about to trade ex-dividend in 4 days. Typically, the ex-dividend date is one business day before the record date which is the date on which a company determines the shareholders eligible to receive a dividend. It is important to be aware of the ex-dividend date because any trade on the stock needs to have been settled on or before the record date. Therefore, if you purchase Malaysia Airports Holdings Berhad's shares on or after the 19th of March, you won't be eligible to receive the dividend, when it is paid on the 8th of April.

The company's next dividend payment will be RM00.108 per share. Last year, in total, the company distributed RM0.11 to shareholders. Based on the last year's worth of payments, Malaysia Airports Holdings Berhad has a trailing yield of 1.2% on the current stock price of RM09.00. We love seeing companies pay a dividend, but it's also important to be sure that laying the golden eggs isn't going to kill our golden goose! So we need to investigate whether Malaysia Airports Holdings Berhad can afford its dividend, and if the dividend could grow.

See our latest analysis for Malaysia Airports Holdings Berhad

Dividends are typically paid out of company income, so if a company pays out more than it earned, its dividend is usually at a higher risk of being cut. That's why it's good to see Malaysia Airports Holdings Berhad paying out a modest 37% 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. It paid out 4.8% of its free cash flow as dividends last year, which is conservatively low.

It's positive to see that Malaysia Airports Holdings 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.

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

Have Earnings And Dividends Been Growing?

Businesses with shrinking earnings are tricky from a dividend perspective. If earnings fall far enough, the company could be forced to cut its dividend. Malaysia Airports Holdings Berhad's earnings per share have fallen at approximately 6.3% a year over the previous five years. Ultimately, when earnings per share decline, the size of the pie from which dividends can be paid, shrinks.

Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. Malaysia Airports Holdings Berhad's dividend payments per share have declined at 2.3% per year on average over the past 10 years, which is uninspiring. While it's not great that earnings and dividends per share have fallen in recent years, we're encouraged by the fact that management has trimmed the dividend rather than risk over-committing the company in a risky attempt to maintain yields to shareholders.

Final Takeaway

Should investors buy Malaysia Airports Holdings Berhad for the upcoming dividend? 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. To summarise, Malaysia Airports Holdings Berhad looks okay on this analysis, although it doesn't appear a stand-out opportunity.

So while Malaysia Airports Holdings Berhad looks good from a dividend perspective, it's always worthwhile being up to date with the risks involved in this stock. For example - Malaysia Airports Holdings Berhad has 1 warning sign we think you should be aware of.

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.