IOI Corporation Berhad (KLSE:IOICORP) Stock Goes Ex-Dividend In Just Four Days

Some investors rely on dividends for growing their wealth, and if you're one of those dividend sleuths, you might be intrigued to know that IOI Corporation Berhad (KLSE:IOICORP) is about to go ex-dividend in just 4 days. The ex-dividend date is usually set to be two business days 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. It is important to be aware of the ex-dividend date because any trade on the stock needs to have been settled on or before the record date. This means that investors who purchase IOI Corporation Berhad's shares on or after the 14th of September will not receive the dividend, which will be paid on the 25th of September.

The company's next dividend payment will be RM00.07 per share, and in the last 12 months, the company paid a total of RM0.11 per share. Calculating the last year's worth of payments shows that IOI Corporation Berhad has a trailing yield of 2.9% on the current share price of RM04.80. If you buy this business for its dividend, you should have an idea of whether IOI Corporation 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.

This technology could replace computers: discover the 20 stocks are working to make quantum computing a reality.

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. That's why it's good to see IOI Corporation Berhad paying out a modest 46% of its earnings. A useful secondary check can be to evaluate whether IOI Corporation Berhad generated enough free cash flow to afford its dividend. Over the last year, it paid out more than three-quarters (75%) 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 IOI 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.

View our latest analysis for IOI Corporation Berhad

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

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. Investors love dividends, so if earnings fall and the dividend is reduced, expect a stock to be sold off heavily at the same time. With that in mind, we're encouraged by the steady growth at IOI Corporation Berhad, with earnings per share up 3.8% on average over the last five years. A high payout ratio of 46% generally happens when a company can't find better uses for the cash. Combined with slim earnings growth in the past few years, IOI Corporation Berhad could be signalling that its future growth prospects are thin.

The main way most investors will assess a company's dividend prospects is by checking the historical rate of dividend growth. IOI Corporation Berhad has delivered 4.5% dividend growth per year on average over the past 10 years. We're glad to see dividends rising alongside earnings over a number of years, which may be a sign the company intends to share the growth with shareholders.

Final Takeaway

From a dividend perspective, should investors buy or avoid IOI Corporation Berhad? Earnings per share have been growing at a steady rate, and IOI Corporation Berhad paid out less than half its profits and more than half its free cash flow as dividends over the last year. All things considered, we are not particularly enthused about IOI Corporation Berhad from a dividend perspective.

In light of that, while IOI Corporation Berhad has an appealing dividend, it's worth knowing the risks involved with this stock. Our analysis shows 1 warning sign for IOI Corporation Berhad and you should be aware of it before buying any shares.

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.