Stock Analysis

Read This Before Considering Swift Haulage Berhad (KLSE:SWIFT) For Its Upcoming RM0.01 Dividend

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KLSE:SWIFT
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Swift Haulage Berhad (KLSE:SWIFT) stock is about to trade ex-dividend in four days. 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 of consequence because whenever a stock is bought or sold, the trade takes at least two business day to settle. Therefore, if you purchase Swift Haulage Berhad's shares on or after the 22nd of March, you won't be eligible to receive the dividend, when it is paid on the 6th of April.

The company's next dividend payment will be RM0.01 per share, and in the last 12 months, the company paid a total of RM0.02 per share. Last year's total dividend payments show that Swift Haulage Berhad has a trailing yield of 4.3% on the current share price of MYR0.465. If you buy this business for its dividend, you should have an idea of whether Swift Haulage 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 Swift Haulage Berhad

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 Swift Haulage Berhad paying out a modest 35% of its earnings. A useful secondary check can be to evaluate whether Swift Haulage Berhad generated enough free cash flow to afford its dividend. Dividends consumed 54% of the company's free cash flow last year, which is within a normal range for most dividend-paying organisations.

It's encouraging to see that the dividend is covered by both profit and cash flow. This generally suggests the dividend is sustainable, as long as earnings don't drop precipitously.

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

historic-dividend
KLSE:SWIFT Historic Dividend March 17th 2023

Have Earnings And Dividends Been Growing?

Businesses with shrinking earnings are tricky from a dividend perspective. Investors love dividends, so if earnings fall and the dividend is reduced, expect a stock to be sold off heavily at the same time. Readers will understand then, why we're concerned to see Swift Haulage Berhad's earnings per share have dropped 11% a year over the past five years. When earnings per share fall, the maximum amount of dividends that can be paid also falls.

Unfortunately Swift Haulage Berhad has only been paying a dividend for a year or so, so there's not much of a history to draw insight from.

To Sum It Up

From a dividend perspective, should investors buy or avoid Swift Haulage Berhad? Earnings per share have fallen significantly, although at least Swift Haulage Berhad paid out less than half of its profits and free cash flow over the last year, leaving some margin of safety. Overall, it's hard to get excited about Swift Haulage Berhad from a dividend perspective.

If you want to look further into Swift Haulage Berhad, it's worth knowing the risks this business faces. In terms of investment risks, we've identified 4 warning signs with Swift Haulage Berhad and understanding them should be part of your investment process.

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

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

Find out whether Swift Haulage 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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