Is It Smart To Buy OSK Ventures International Berhad (KLSE:OSKVI) Before It Goes Ex-Dividend?
OSK Ventures International Berhad (KLSE:OSKVI) stock is about to trade ex-dividend in three days. The ex-dividend date is two business days before a company's record date in most cases, which is the date on which the company determines which shareholders are entitled to receive a 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. Therefore, if you purchase OSK Ventures International Berhad's shares on or after the 17th of September, you won't be eligible to receive the dividend, when it is paid on the 9th of October.
The company's next dividend payment will be RM00.02 per share. Last year, in total, the company distributed RM0.04 to shareholders. Based on the last year's worth of payments, OSK Ventures International Berhad stock has a trailing yield of around 7.5% on the current share price of RM00.53. Dividends are a major contributor to investment returns for long term holders, but only if the dividend continues to be paid. As a result, readers should always check whether OSK Ventures International Berhad has been able to grow its dividends, or if the dividend might be cut.
If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. Fortunately OSK Ventures International Berhad's payout ratio is modest, at just 29% of profit.
Companies that pay out less in dividends than they earn in profits generally have more sustainable dividends. The lower the payout ratio, the more wiggle room the business has before it could be forced to cut the dividend.
See our latest analysis for OSK Ventures International Berhad
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 fall far enough, the company could be forced to cut its dividend. That's why it's comforting to see OSK Ventures International Berhad's earnings have been skyrocketing, up 28% per annum for the past five years.
Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. OSK Ventures International Berhad has delivered 8.0% dividend growth per year on average over the past nine years. It's encouraging to see the company lifting dividends while earnings are growing, suggesting at least some corporate interest in rewarding shareholders.
To Sum It Up
Should investors buy OSK Ventures International Berhad for the upcoming dividend? Typically, companies that are growing rapidly and paying out a low fraction of earnings are keeping the profits for reinvestment in the business. This strategy can add significant value to shareholders over the long term - as long as it's done without issuing too many new shares. Overall, OSK Ventures International Berhad looks like a promising dividend stock in this analysis, and we think it would be worth investigating further.
With that in mind, a critical part of thorough stock research is being aware of any risks that stock currently faces. For example, OSK Ventures International Berhad has 4 warning signs (and 2 which don't sit too well with us) we think you should know about.
Generally, we wouldn't recommend just buying the first dividend stock you see. Here's a curated list of interesting stocks that are strong dividend payers.
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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.