Scicom (MSC) Berhad (KLSE:SCICOM) Will Pay A RM00.03 Dividend In Three Days
Scicom (MSC) Berhad (KLSE:SCICOM) stock is about to trade ex-dividend in 3 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 an important date to be aware of as any purchase of the stock made on or after this date might mean a late settlement that doesn't show on the record date. In other words, investors can purchase Scicom (MSC) Berhad's shares before the 12th of December in order to be eligible for the dividend, which will be paid on the 30th of December.
The company's next dividend payment will be RM00.03 per share, and in the last 12 months, the company paid a total of RM0.055 per share. Based on the last year's worth of payments, Scicom (MSC) Berhad stock has a trailing yield of around 3.8% on the current share price of RM01.45. If you buy this business for its dividend, you should have an idea of whether Scicom (MSC) Berhad's dividend is reliable and sustainable. We need to see whether the dividend is covered by earnings and if it's growing.
If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. Scicom (MSC) Berhad paid out 93% of its earnings, which is more than we're comfortable with, unless there are mitigating circumstances. Yet cash flow is typically more important than profit for assessing dividend sustainability, so we should always check if the company generated enough cash to afford its dividend. It distributed 47% of its free cash flow as dividends, a comfortable payout level for most companies.
It's good to see that while Scicom (MSC) Berhad's dividends were not well covered by profits, at least they are affordable from a cash perspective. Still, if this were to happen repeatedly, we'd be concerned about whether the dividend is sustainable in a downturn.
Check out our latest analysis for Scicom (MSC) Berhad
Click here to see how much of its profit Scicom (MSC) Berhad paid out over the last 12 months.
Have Earnings And Dividends Been Growing?
Businesses with strong growth prospects usually make the best dividend payers, because it's easier to grow dividends when earnings per share are improving. If earnings decline and the company is forced to cut its dividend, investors could watch the value of their investment go up in smoke. With that in mind, we're encouraged by the steady growth at Scicom (MSC) Berhad, with earnings per share up 2.4% on average over the last five years.
Many investors will assess a company's dividend performance by evaluating how much the dividend payments have changed over time. Scicom (MSC) Berhad has seen its dividend decline 3.1% per annum on average over the past 10 years, which is not great to see. It's unusual to see earnings per share increasing at the same time as dividends per share have been in decline. We'd hope it's because the company is reinvesting heavily in its business, but it could also suggest business is lumpy.
To Sum It Up
From a dividend perspective, should investors buy or avoid Scicom (MSC) Berhad? Earnings per share have grown modestly, and last year Scicom (MSC) Berhad paid out a low percentage of its cash flow. However, its dividend payments were not well covered by profits. Overall, it's not a bad combination, but we feel that there are likely more attractive dividend prospects out there.
However if you're still interested in Scicom (MSC) Berhad as a potential investment, you should definitely consider some of the risks involved with Scicom (MSC) Berhad. Be aware that Scicom (MSC) Berhad is showing 3 warning signs in our investment analysis, and 1 of those can't be ignored...
If you're in the market for strong dividend payers, we recommend checking our selection of top 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.