Lingkaran Trans Kota Holdings Berhad (KLSE:LITRAK) Will Pay A RM0.10 Dividend In Three Days

Lingkaran Trans Kota Holdings Berhad (KLSE:LITRAK) stock is about to trade ex-dividend in three days. Ex-dividend means that investors that purchase the stock on or after the 19th of March will not receive this dividend, which will be paid on the 30th of March.

Lingkaran Trans Kota Holdings Berhad's upcoming dividend is RM0.10 a share, following on from the last 12 months, when the company distributed a total of RM0.20 per share to shareholders. Calculating the last year's worth of payments shows that Lingkaran Trans Kota Holdings Berhad has a trailing yield of 5.0% on the current share price of MYR4. Dividends are an important source of income to many shareholders, but the health of the business is crucial to maintaining those dividends. We need to see whether the dividend is covered by earnings and if it's growing.

Check out our latest analysis for Lingkaran Trans Kota Holdings 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. Fortunately Lingkaran Trans Kota Holdings Berhad's payout ratio is modest, at just 49% of profit. 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. The company paid out 94% of its free cash flow over the last year, which we think is outside the ideal range for most businesses. Companies usually need cash more than they need earnings - expenses don't pay themselves - so it's not great to see it paying out so much of its cash flow.

While Lingkaran Trans Kota 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. Were this to happen repeatedly, this would be a risk to Lingkaran Trans Kota Holdings Berhad's ability to maintain its dividend.

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

Have Earnings And Dividends Been Growing?

Stocks in companies that generate sustainable earnings growth often make the best dividend prospects, as it is easier to lift the dividend when earnings are rising. If earnings fall far enough, the company could be forced to cut its dividend. With that in mind, we're encouraged by the steady growth at Lingkaran Trans Kota Holdings Berhad, with earnings per share up 8.9% on average over the last five years. Earnings have been growing at a steady rate, but we're concerned dividend payments consumed most of the company's cash flow over the past year.

Many investors will assess a company's dividend performance by evaluating how much the dividend payments have changed over time. In the last 10 years, Lingkaran Trans Kota Holdings Berhad has lifted its dividend by approximately 1.6% a year on average.

Final Takeaway

Should investors buy Lingkaran Trans Kota Holdings Berhad for the upcoming dividend? Lingkaran Trans Kota Holdings Berhad delivered reasonable earnings per share growth in recent times, and paid out less than half its profits and 94% of its cash flow over the last year, which is a mediocre outcome. Overall, it's hard to get excited about Lingkaran Trans Kota Holdings Berhad from a dividend perspective.

So if you want to do more digging on Lingkaran Trans Kota Holdings Berhad, you'll find it worthwhile knowing the risks that this stock faces. For example - Lingkaran Trans Kota Holdings Berhad has 2 warning signs we think you should be aware of.

We wouldn't recommend just buying the first dividend stock you see, though. Here's a list of interesting dividend stocks with a greater than 2% yield and an upcoming dividend.

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This article by Simply Wall St is general in nature. 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.
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