Just Four Days Till Carlsberg Brewery Malaysia Berhad (KLSE:CARLSBG) Will Be Trading Ex-Dividend
Some investors rely on dividends for growing their wealth, and if you're one of those dividend sleuths, you might be intrigued to know that Carlsberg Brewery Malaysia Berhad (KLSE:CARLSBG) is about to go ex-dividend in just four 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. It is important to be aware of the ex-dividend date because any trade on the stock needs to have been settled on or before the record date. This means that investors who purchase Carlsberg Brewery Malaysia Berhad's shares on or after the 13th of October will not receive the dividend, which will be paid on the 12th of November.
The company's upcoming dividend is RM00.21 a share, following on from the last 12 months, when the company distributed a total of RM1.11 per share to shareholders. Looking at the last 12 months of distributions, Carlsberg Brewery Malaysia Berhad has a trailing yield of approximately 9.1% on its current stock price of RM012.18. If you buy this business for its dividend, you should have an idea of whether Carlsberg Brewery Malaysia Berhad's dividend is reliable and sustainable. As a result, readers should always check whether Carlsberg Brewery Malaysia Berhad 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. Carlsberg Brewery Malaysia Berhad paid out 91% of its earnings, which is more than we're comfortable with, unless there are mitigating circumstances. A useful secondary check can be to evaluate whether Carlsberg Brewery Malaysia Berhad generated enough free cash flow to afford its dividend. It paid out 86% of its free cash flow as dividends, which is within usual limits but will limit the company's ability to lift the dividend if there's no growth.
It's good to see that while Carlsberg Brewery Malaysia Berhad's dividends were not well covered by profits, at least they are affordable from a cash perspective. Still, if the company continues paying out such a high percentage of its profits, the dividend could be at risk if business turns sour.
See our latest analysis for Carlsberg Brewery Malaysia Berhad
Click here to see the company's payout ratio, plus analyst estimates of its future dividends.
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. Fortunately for readers, Carlsberg Brewery Malaysia Berhad's earnings per share have been growing at 19% a year for the past five years.
Many investors will assess a company's dividend performance by evaluating how much the dividend payments have changed over time. Since the start of our data, 10 years ago, Carlsberg Brewery Malaysia Berhad has lifted its dividend by approximately 4.4% a year on average. It's good to see both earnings and the dividend have improved - although the former has been rising much quicker than the latter, possibly due to the company reinvesting more of its profits in growth.
To Sum It Up
Should investors buy Carlsberg Brewery Malaysia Berhad for the upcoming dividend? Growing earnings per share and a normal cashflow payout ratio is an ok combination, but we're concerned that the company is paying out such a high percentage of its income as dividends. Overall, it's hard to get excited about Carlsberg Brewery Malaysia Berhad from a dividend perspective.
However if you're still interested in Carlsberg Brewery Malaysia Berhad as a potential investment, you should definitely consider some of the risks involved with Carlsberg Brewery Malaysia Berhad. Our analysis shows 1 warning sign for Carlsberg Brewery Malaysia Berhad and you should be aware of this before buying any shares.
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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.