Yahoo Finance Sime Darby Plantation Berhad (KLSE:SIMEPLT) Will Pay A RM0.06 Dividend In Three Days
It looks like Sime Darby Plantation Berhad (KLSE:SIMEPLT) is about to go ex-dividend in the next three days. The ex-dividend date occurs one day before the record date which is the day on which shareholders need to be on the company's books in order to receive a dividend. 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. Accordingly, Sime Darby Plantation Berhad investors that purchase the stock on or after the 27th of April will not receive the dividend, which will be paid on the 15th of May.
The company's next dividend payment will be RM0.06 per share. Last year, in total, the company distributed RM0.16 to shareholders. Based on the last year's worth of payments, Sime Darby Plantation Berhad has a trailing yield of 3.7% on the current stock price of MYR4.31. 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 Sime Darby Plantation Berhad can afford its dividend, and if the dividend could grow.
See our latest analysis for Sime Darby Plantation 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 Sime Darby Plantation Berhad's payout ratio is modest, at just 45% of profit. That said, even highly profitable companies sometimes might not generate enough cash to pay the dividend, which is why we should always check if the dividend is covered by cash flow. Over the last year, it paid out more than three-quarters (86%) of its free cash flow generated, which is fairly high and may be starting to limit reinvestment in the business.
It's positive to see that Sime Darby Plantation 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?
Companies with falling earnings are riskier for dividend shareholders. If earnings fall far enough, the company could be forced to cut its dividend. With that in mind, we're discomforted by Sime Darby Plantation Berhad's 12% per annum decline in earnings in the past five years. When earnings per share fall, the maximum amount of dividends that can be paid also falls.
Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. Sime Darby Plantation Berhad has delivered 18% dividend growth per year on average over the past five years.
The Bottom Line
Is Sime Darby Plantation Berhad worth buying for its dividend? Its earnings per share have been declining meaningfully, although it is paying out less than half its income and more than half its cash flow as dividends. Neither payout ratio appears an immediate concern, but we're concerned about the earnings. Overall, it's not a bad combination, but we feel that there are likely more attractive dividend prospects out there.
However if you're still interested in Sime Darby Plantation Berhad as a potential investment, you should definitely consider some of the risks involved with Sime Darby Plantation Berhad. For instance, we've identified 2 warning signs for Sime Darby Plantation Berhad (1 is potentially serious) you should be aware of.
A common investing mistake is buying the first interesting stock you see. Here you can find a full list of high-yield 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.
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