Be Sure To Check Out Chin Teck Plantations Berhad (KLSE:CHINTEK) Before It Goes Ex-Dividend

Chin Teck Plantations Berhad (KLSE:CHINTEK) 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. In other words, investors can purchase Chin Teck Plantations Berhad's shares before the 31st of December in order to be eligible for the dividend, which will be paid on the 23rd of January.

The company's next dividend payment will be RM00.20 per share, and in the last 12 months, the company paid a total of RM0.51 per share. Looking at the last 12 months of distributions, Chin Teck Plantations Berhad has a trailing yield of approximately 5.2% on its current stock price of RM010.78. If you buy this business for its dividend, you should have an idea of whether Chin Teck Plantations Berhad's dividend is reliable and sustainable. So we need to investigate whether Chin Teck Plantations Berhad can afford its dividend, and if the dividend could grow.

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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. Chin Teck Plantations Berhad has a low and conservative payout ratio of just 7.3% of its income after tax. Yet cash flows are even more important than profits for assessing a dividend, so we need to see if the company generated enough cash to pay its distribution. Luckily it paid out just 17% of its free cash flow last year.

It's positive to see that Chin Teck Plantations 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 Chin Teck Plantations Berhad

Click here to see how much of its profit Chin Teck Plantations 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 earnings decline and the company is forced to cut its dividend, investors could watch the value of their investment go up in smoke. It's encouraging to see Chin Teck Plantations Berhad has grown its earnings rapidly, up 41% a year for the past five years. Chin Teck Plantations Berhad earnings per share have been sprinting ahead like the Road Runner at a track and field day; scarcely stopping even for a cheeky "beep-beep". We also like that it is reinvesting most of its profits in its business.'

The main way most investors will assess a company's dividend prospects is by checking the historical rate of dividend growth. Chin Teck Plantations Berhad has delivered an average of 11% per year annual increase in its dividend, based on the past 10 years of dividend payments. It's great to see earnings per share growing rapidly over several years, and dividends per share growing right along with it.

To Sum It Up

Is Chin Teck Plantations Berhad an attractive dividend stock, or better left on the shelf? Chin Teck Plantations Berhad has grown its earnings per share while simultaneously reinvesting in the business. Unfortunately it's cut the dividend at least once in the past 10 years, but the conservative payout ratio makes the current dividend look sustainable. There's a lot to like about Chin Teck Plantations Berhad, and we would prioritise taking a closer look at it.

On that note, you'll want to research what risks Chin Teck Plantations Berhad is facing. Every company has risks, and we've spotted 2 warning signs for Chin Teck Plantations Berhad (of which 1 is concerning!) you should know about.

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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.