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华尔街日报Do These 3 Checks Before Buying ELK-Desa Resources Berhad (KLSE:ELKDESA) For Its Upcoming Dividend
Regular readers will know that we love our dividends at Simply Wall St, which is why it's exciting to see ELK-Desa Resources Berhad (KLSE:ELKDESA) is about to trade ex-dividend in the next 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. The ex-dividend date is important because any transaction on a stock needs to have been settled before the record date in order to be eligible for a dividend. Thus, you can purchase ELK-Desa Resources Berhad's shares before the 22nd of December in order to receive the dividend, which the company will pay on the 8th of January.
The company's next dividend payment will be RM00.02 per share. Last year, in total, the company distributed RM0.045 to shareholders. Looking at the last 12 months of distributions, ELK-Desa Resources Berhad has a trailing yield of approximately 4.0% on its current stock price of RM01.12. Dividends are a major contributor to investment returns for long term holders, but only if the dividend continues to be paid. So we need to check whether the dividend payments are covered, and if earnings are growing.
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. ELK-Desa Resources Berhad is paying out an acceptable 65% of its profit, a common payout level among most companies.
Generally speaking, the lower a company's payout ratios, the more resilient its dividend usually is.
See our latest analysis for ELK-Desa Resources Berhad
Click here to see how much of its profit ELK-Desa Resources Berhad paid out over the last 12 months.
Have Earnings And Dividends Been Growing?
When earnings decline, dividend companies become much harder to analyse and own safely. If earnings decline and the company is forced to cut its dividend, investors could watch the value of their investment go up in smoke. That's why it's not ideal to see ELK-Desa Resources Berhad's earnings per share have been shrinking at 2.1% a year over the previous five years.
The main way most investors will assess a company's dividend prospects is by checking the historical rate of dividend growth. ELK-Desa Resources Berhad has seen its dividend decline 1.0% per annum on average over the past 10 years, which is not great to see.
To Sum It Up
Is ELK-Desa Resources Berhad worth buying for its dividend? We're not overly enthused to see ELK-Desa Resources Berhad's earnings in retreat at the same time as the company is paying out more than half of its earnings as dividends to shareholders. This is not an overtly appealing combination of characteristics, and we're just not that interested in this company's dividend.
With that being said, if you're still considering ELK-Desa Resources Berhad as an investment, you'll find it beneficial to know what risks this stock is facing. To that end, you should learn about the 2 warning signs we've spotted with ELK-Desa Resources Berhad (including 1 which is concerning).
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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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.