Read This Before Considering Asia File Corporation Bhd. (KLSE:ASIAFLE) For Its Upcoming RM00.02 Dividend
Asia File Corporation Bhd. (KLSE:ASIAFLE) is about to trade ex-dividend in the next 3 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 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. Thus, you can purchase Asia File Corporation Bhd's shares before the 1st of October in order to receive the dividend, which the company will pay on the 22nd of October.
The company's next dividend payment will be RM00.02 per share. Last year, in total, the company distributed RM0.02 to shareholders. Last year's total dividend payments show that Asia File Corporation Bhd has a trailing yield of 1.5% on the current share price of RM01.31. If you buy this business for its dividend, you should have an idea of whether Asia File Corporation Bhd'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 from company earnings. If a company pays more in dividends than it earned in profit, then the dividend could be unsustainable. Asia File Corporation Bhd is paying out an acceptable 59% of its profit, a common payout level among most companies. A useful secondary check can be to evaluate whether Asia File Corporation Bhd generated enough free cash flow to afford its dividend. The good news is it paid out just 17% of its free cash flow in the last year.
It's positive to see that Asia File Corporation Bhd'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.
Check out our latest analysis for Asia File Corporation Bhd
Click here to see how much of its profit Asia File Corporation Bhd paid out over the last 12 months.
Have Earnings And Dividends Been Growing?
Companies with falling earnings are riskier for dividend shareholders. If earnings fall far enough, the company could be forced to cut its dividend. Asia File Corporation Bhd's earnings per share have plummeted approximately 32% a year over the previous five years.
Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. Asia File Corporation Bhd's dividend payments per share have declined at 19% per year on average over the past 10 years, which is uninspiring. It's never nice to see earnings and dividends falling, but at least management has cut the dividend rather than potentially risk the company's health in an attempt to maintain it.
To Sum It Up
Is Asia File Corporation Bhd an attractive dividend stock, or better left on the shelf? The payout ratios are within a reasonable range, implying the dividend may be sustainable. Declining earnings are a serious concern, however, and could pose a threat to the dividend in future. Overall, it's hard to get excited about Asia File Corporation Bhd from a dividend perspective.
If you're not too concerned about Asia File Corporation Bhd's ability to pay dividends, you should still be mindful of some of the other risks that this business faces. We've identified 2 warning signs with Asia File Corporation Bhd (at least 1 which shouldn't be ignored), and understanding these should be part of your investment process.
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.