Only Four Days Left To Cash In On SEG International Bhd's (KLSE:SEG) Dividend
SEG International Bhd (KLSE:SEG) is about to trade ex-dividend in the next 4 days. The ex-dividend date is usually set to be one business day before the record date which is the cut-off date on which you must be present on the company's books as a shareholder in order to receive the 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. Therefore, if you purchase SEG International Bhd's shares on or after the 11th of January, you won't be eligible to receive the dividend, when it is paid on the 20th of January.
The company's next dividend payment will be RM0.02 per share, and in the last 12 months, the company paid a total of RM0.03 per share. Based on the last year's worth of payments, SEG International Bhd has a trailing yield of 7.8% on the current stock price of MYR0.645. If you buy this business for its dividend, you should have an idea of whether SEG International Bhd's dividend is reliable and sustainable. As a result, readers should always check whether SEG International Bhd has been able to grow its dividends, or if the dividend might be cut.
View our latest analysis for SEG International Bhd
If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. SEG International Bhd paid out 170% of profit in the past year, which we think is typically not sustainable unless there are mitigating characteristics such as unusually strong cash flow or a large cash balance. 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. 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 good to see that while SEG International Bhd's dividends were not covered by profits, at least they are affordable from a cash perspective. Still, if the company repeatedly paid a dividend greater than its profits, we'd be concerned. Very few companies are able to sustainably pay dividends larger than their reported earnings.
Click here to see how much of its profit SEG International Bhd paid out over the last 12 months.
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 business enters a downturn and the dividend is cut, the company could see its value fall precipitously. This is why it's a relief to see SEG International Bhd earnings per share are up 9.9% per annum over the last five years.
Many investors will assess a company's dividend performance by evaluating how much the dividend payments have changed over time. SEG International Bhd has seen its dividend decline 1.5% per annum on average over the past 10 years, which is not great to see.
The Bottom Line
Has SEG International Bhd got what it takes to maintain its dividend payments? While earnings per share have been growing slowly, SEG International Bhd is paying out an uncomfortably high percentage of its earnings. However it did pay out a lower percentage of its cashflow. It's not that we think SEG International Bhd is a bad company, but these characteristics don't generally lead to outstanding dividend performance.
Although, if you're still interested in SEG International Bhd and want to know more, you'll find it very useful to know what risks this stock faces. For example - SEG International Bhd has 1 warning sign we think 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.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
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.
Join A Paid User Research Session
You’ll receive a US$30 Amazon Gift card for 1 hour of your time while helping us build better investing tools for the individual investors like yourself. Sign up here
