Read This Before Considering OKA Corporation Bhd (KLSE:OKA) For Its Upcoming RM00.015 Dividend
OKA Corporation Bhd (KLSE:OKA) is about to trade ex-dividend in the next four 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. Accordingly, OKA Corporation Bhd investors that purchase the stock on or after the 11th of November will not receive the dividend, which will be paid on the 20th of November.
The company's next dividend payment will be RM00.015 per share, and in the last 12 months, the company paid a total of RM0.027 per share. Calculating the last year's worth of payments shows that OKA Corporation Bhd has a trailing yield of 5.5% on the current share price of RM00.49. 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! As a result, readers should always check whether OKA Corporation Bhd has been able to grow its dividends, or if the dividend might be cut.
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. That's why it's good to see OKA Corporation Bhd paying out a modest 46% of its earnings. 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. It distributed 38% of its free cash flow as dividends, a comfortable payout level for most companies.
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 OKA Corporation Bhd
Click here to see how much of its profit OKA Corporation Bhd paid out over the last 12 months.
Have Earnings And Dividends Been Growing?
Stocks with flat earnings can still be attractive dividend payers, but it is important to be more conservative with your approach and demand a greater margin for safety when it comes to dividend sustainability. If earnings fall far enough, the company could be forced to cut its dividend. That explains why we're not overly excited about OKA Corporation Bhd's flat earnings over the past five years. It's better than seeing them drop, certainly, but over the long term, all of the best dividend stocks are able to meaningfully grow their earnings per share.
The main way most investors will assess a company's dividend prospects is by checking the historical rate of dividend growth. In the past 10 years, OKA Corporation Bhd has increased its dividend at approximately 3.0% a year on average.
To Sum It Up
Has OKA Corporation Bhd got what it takes to maintain its dividend payments? Earnings per share have been flat, although at least the company is paying out a low and conservative percentage of both its earnings and cash flow. It's definitely not great to see earnings falling, but at least there may be some buffer before the dividend gets cut. Overall we're not hugely bearish on the stock, but there are likely better dividend investments out there.
So while OKA Corporation Bhd looks good from a dividend perspective, it's always worthwhile being up to date with the risks involved in this stock. To that end, you should learn about the 3 warning signs we've spotted with OKA Corporation Bhd (including 1 which makes us a bit uncomfortable).
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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