Pintaras Jaya Berhad (KLSE:PTARAS) Looks Like A Good Stock, And It's Going Ex-Dividend Soon

Regular readers will know that we love our dividends at Simply Wall St, which is why it's exciting to see Pintaras Jaya Berhad (KLSE:PTARAS) is about to trade ex-dividend in the next 4 days. Typically, the ex-dividend date is two business days before the record date, which is the date on which a company determines the shareholders eligible 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. Therefore, if you purchase Pintaras Jaya Berhad's shares on or after the 30th of December, you won't be eligible to receive the dividend, when it is paid on the 15th of January.

The company's next dividend payment will be RM00.06 per share. Last year, in total, the company distributed RM0.06 to shareholders. Based on the last year's worth of payments, Pintaras Jaya Berhad stock has a trailing yield of around 3.9% on the current share price of RM01.54. If you buy this business for its dividend, you should have an idea of whether Pintaras Jaya Berhad's dividend is reliable and sustainable. So we need to investigate whether Pintaras Jaya Berhad can afford its dividend, and if the dividend could grow.

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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 Pintaras Jaya Berhad paying out a modest 28% 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. Fortunately, it paid out only 33% of its free cash flow in the past year.

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.

View our latest analysis for Pintaras Jaya Berhad

Click here to see how much of its profit Pintaras Jaya Berhad paid out over the last 12 months.

Have Earnings And Dividends Been Growing?

Businesses with strong growth prospects usually make the best dividend payers, because it's easier to grow dividends when earnings per share are improving. If business enters a downturn and the dividend is cut, the company could see its value fall precipitously. With that in mind, we're encouraged by the steady growth at Pintaras Jaya Berhad, with earnings per share up 2.4% on average over the last five years. Recent growth has not been impressive. Yet there are several ways to grow the dividend, and one of them is simply that the company may choose to pay out more of its earnings as dividends.

Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. Pintaras Jaya Berhad has seen its dividend decline 9.3% per annum on average over the past 10 years, which is not great to see. It's unusual to see earnings per share increasing at the same time as dividends per share have been in decline. We'd hope it's because the company is reinvesting heavily in its business, but it could also suggest business is lumpy.

To Sum It Up

Is Pintaras Jaya Berhad worth buying for its dividend? Earnings per share growth has been growing somewhat, and Pintaras Jaya Berhad is paying out less than half its earnings and cash flow as dividends. This is interesting for a few reasons, as it suggests management may be reinvesting heavily in the business, but it also provides room to increase the dividend in time. We would prefer to see earnings growing faster, but the best dividend stocks over the long term typically combine significant earnings per share growth with a low payout ratio, and Pintaras Jaya Berhad is halfway there. Overall we think this is an attractive combination and worthy of further research.

While it's tempting to invest in Pintaras Jaya Berhad for the dividends alone, you should always be mindful of the risks involved. To help with this, we've discovered 2 warning signs for Pintaras Jaya Berhad that you should be aware of before investing in their shares.

Generally, we wouldn't recommend just buying the first dividend stock you see. Here's a curated list of interesting stocks that are strong dividend payers.

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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.