Three Days Left Until Magni-Tech Industries Berhad (KLSE:MAGNI) Trades Ex-Dividend
Regular readers will know that we love our dividends at Simply Wall St, which is why it's exciting to see Magni-Tech Industries Berhad (KLSE:MAGNI) is about to trade ex-dividend in the next three 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. Meaning, you will need to purchase Magni-Tech Industries Berhad's shares before the 18th of September to receive the dividend, which will be paid on the 8th of October.
The company's next dividend payment will be RM00.028 per share, and in the last 12 months, the company paid a total of RM0.11 per share. Based on the last year's worth of payments, Magni-Tech Industries Berhad has a trailing yield of 6.7% on the current stock price of RM01.63. If you buy this business for its dividend, you should have an idea of whether Magni-Tech Industries 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.
Dividends are typically paid out of company income, so if a company pays out more than it earned, its dividend is usually at a higher risk of being cut. Fortunately Magni-Tech Industries Berhad's payout ratio is modest, at just 39% of profit. 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. Fortunately, it paid out only 37% of its free cash flow in the past year.
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.
See our latest analysis for Magni-Tech Industries Berhad
Click here to see how much of its profit Magni-Tech Industries Berhad 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 business enters a downturn and the dividend is cut, the company could see its value fall precipitously. That explains why we're not overly excited about Magni-Tech Industries Berhad'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. Magni-Tech Industries Berhad has delivered an average of 11% per year annual increase in its dividend, based on the past 10 years of dividend payments.
The Bottom Line
Is Magni-Tech Industries Berhad worth buying for its dividend? 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. In summary, it's hard to get excited about Magni-Tech Industries Berhad from a dividend perspective.
In light of that, while Magni-Tech Industries Berhad has an appealing dividend, it's worth knowing the risks involved with this stock. Our analysis shows 1 warning sign for Magni-Tech Industries Berhad and you should be aware of this 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.
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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.