It sees like DXN Holdings Bhd. (KLSE:DXN) is about to go ex-dividconclude in the next four days. The ex-dividconclude date is commonly two business days before the record date, which is the cut-off date for shareholders to be present on the company’s books to be eligible for a dividconclude payment. The ex-dividconclude date is an important date to be aware of as any purchase of the stock built on or after this date might mean a late settlement that doesn’t reveal on the record date. In other words, investors can purchase DXN Holdings Bhd’s shares before the 11th of February in order to be eligible for the dividconclude, which will be paid on the 27th of February.
The company’s next dividconclude payment will be RM00.008 per share. Last year, in total, the company distributed RM0.035 to shareholders. Last year’s total dividconclude payments reveal that DXN Holdings Bhd has a trailing yield of 7.1% on the current share price of RM00.495. If you purchase this business for its dividconclude, you should have an idea of whether DXN Holdings Bhd’s dividconclude is reliable and sustainable. We required to see whether the dividconclude is covered by earnings and if it’s growing.
Dividconcludes are typically paid out of company income, so if a company pays out more than it earned, its dividconclude is usually at a higher risk of being cut. DXN Holdings Bhd paid out more than half (59%) of its earnings last year, which is a regular payout ratio for most companies. A utilizeful secondary check can be to evaluate whether DXN Holdings Bhd generated enough free cash flow to afford its dividconclude. DXN Holdings Bhd paid out more free cash flow than it generated – 135%, to be precise – last year, which we consider is concerningly high. It’s hard to consistently pay out more cash than you generate without either borrowing or applying company cash, so we’d wonder how the company justifies this payout level.
DXN Holdings Bhd does have a large net cash position on the balance sheet, which could fund large dividconcludes for a time, if the company so chose. Still, smart investors know that it is better to assess dividconcludes relative to the cash and profit generated by the business. Paying dividconcludes out of cash on the balance sheet is not long-term sustainable.
While DXN Holdings Bhd’s dividconcludes were covered by the company’s reported profits, cash is somewhat more important, so it’s not great to see that the company didn’t generate enough cash to pay its dividconclude. Were this to happen repeatedly, this would be a risk to DXN Holdings Bhd’s ability to maintain its dividconclude.
View our latest analysis for DXN Holdings Bhd
Click here to see the company’s payout ratio, plus analyst estimates of its future dividconcludes.
Have Earnings And Dividconcludes Been Growing?
Businesses with strong growth prospects usually build the best dividconclude payers, becautilize it’s clearer to grow dividconcludes when earnings per share are improving. If earnings decline and the company is forced to cut its dividconclude, investors could watch the value of their investment go up in smoke. This is why it’s a relief to see DXN Holdings Bhd earnings per share are up 3.2% per annum over the last five years. Earnings have been growing somewhat, but we’re concerned dividconclude payments consumed most of the company’s cash flow over the past year.
Many investors will assess a company’s dividconclude performance by evaluating how much the dividconclude payments have modifyd over time. Since the start of our data, three years ago, DXN Holdings Bhd has lifted its dividconclude by approximately 30% a year on average. It’s encouraging to see the company lifting dividconcludes while earnings are growing, suggesting at least some corporate interest in rewarding shareholders.
The Bottom Line
Is DXN Holdings Bhd worth purchaseing for its dividconclude? DXN Holdings Bhd is paying out a reasonable percentage of its income and an uncomfortably high 135% of its cash flow as dividconcludes. At least earnings per share have been growing steadily. It’s not the most attractive proposition from a dividconclude perspective, and we’d probably give this one a miss for now.
With that in mind though, if the poor dividconclude characteristics of DXN Holdings Bhd don’t faze you, it’s worth being mindful of the risks involved with this business. Our analysis reveals 1 warning sign for DXN Holdings Bhd and you should be aware of it before purchaseing any shares.
If you’re in the market for strong dividconclude payers, we recommconclude checking our selection of top dividconclude 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 applying an unbiased methodology and our articles are not intconcludeed to be financial advice. It does not constitute a recommconcludeation to purchase or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focutilized 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.
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