Here's What We Like About Taliworks Corporation Berhad's (KLSE:TALIWRK) Upcoming Dividend

Taliworks Corporation Berhad (KLSE:TALIWRK) stock is about to trade ex-dividend in 3 days. The ex-dividend date generally occurs two days 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 of consequence because whenever a stock is bought or sold, the trade can take two business days or more to settle. Meaning, you will need to purchase Taliworks Corporation Berhad's shares before the 11th of June to receive the dividend, which will be paid on the 30th of June.

The company's next dividend payment will be RM00.0025 per share, on the back of last year when the company paid a total of RM0.022 to shareholders. Looking at the last 12 months of distributions, Taliworks Corporation Berhad has a trailing yield of approximately 5.7% on its current stock price of RM00.395. Dividends are an important source of income to many shareholders, but the health of the business is crucial to maintaining those dividends. So we need to check whether the dividend payments are covered, and if earnings are growing.

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Dividends are typically paid from company earnings. If a company pays more in dividends than it earned in profit, then the dividend could be unsustainable. Taliworks Corporation Berhad paid out a comfortable 49% of its profit last year. A useful secondary check can be to evaluate whether Taliworks Corporation Berhad generated enough free cash flow to afford its dividend. It distributed 49% of its free cash flow as dividends, a comfortable payout level for most companies.

It's positive to see that Taliworks Corporation 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.

See our latest analysis for Taliworks Corporation Berhad

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

Have Earnings And Dividends Been Growing?

Companies with consistently growing earnings per share generally make the best dividend stocks, as they usually find it easier to grow dividends per share. 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 Taliworks Corporation Berhad earnings per share are up 6.6% per annum over the last five years. Management have been reinvested more than half of the company's earnings within the business, and the company has been able to grow earnings with this retained capital. Organisations that reinvest heavily in themselves typically get stronger over time, which can bring attractive benefits such as stronger earnings and dividends.

Many investors will assess a company's dividend performance by evaluating how much the dividend payments have changed over time. Taliworks Corporation Berhad's dividend payments per share have declined at 7.3% per year on average over the past 10 years, which is uninspiring. Taliworks Corporation Berhad is a rare case where dividends have been decreasing at the same time as earnings per share have been improving. It's unusual to see, and could point to unstable conditions in the core business, or more rarely an intensified focus on reinvesting profits.

Final Takeaway

From a dividend perspective, should investors buy or avoid Taliworks Corporation Berhad? Earnings per share growth has been growing somewhat, and Taliworks Corporation 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 Taliworks Corporation Berhad is halfway there. Overall we think this is an attractive combination and worthy of further research.

On that note, you'll want to research what risks Taliworks Corporation Berhad is facing. For example - Taliworks Corporation Berhad has 1 warning sign we think you should be aware of.

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