雅虎香港財經 Should You Buy Hibiscus Petroleum Berhad (KLSE:HIBISCS) For Its Upcoming Dividend?
Hibiscus Petroleum Berhad (KLSE:HIBISCS) is about to trade ex-dividend in the next three days. The ex-dividend date occurs one day 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. 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. Accordingly, Hibiscus Petroleum Berhad investors that purchase the stock on or after the 20th of June will not receive the dividend, which will be paid on the 19th of July.
The company's next dividend payment will be RM00.02 per share, and in the last 12 months, the company paid a total of RM0.05 per share. Based on the last year's worth of payments, Hibiscus Petroleum Berhad has a trailing yield of 2.1% on the current stock price of RM02.43. If you buy this business for its dividend, you should have an idea of whether Hibiscus Petroleum Berhad's dividend is reliable and sustainable. We need to see whether the dividend is covered by earnings and if it's growing.
View our latest analysis for Hibiscus Petroleum Berhad
If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. Hibiscus Petroleum Berhad paid out just 12% of its profit last year, which we think is conservatively low and leaves plenty of margin for unexpected circumstances. Yet cash flows are even more important than profits for assessing a dividend, so we need to see if the company generated enough cash to pay its distribution. It paid out more than half (52%) of its free cash flow in the past year, which is within an average range for most companies.
It's positive to see that Hibiscus Petroleum Berhad'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.
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 business enters a downturn and the dividend is cut, the company could see its value fall precipitously. For this reason, we're glad to see Hibiscus Petroleum Berhad's earnings per share have risen 13% per annum over the last five years. Hibiscus Petroleum Berhad has an average payout ratio which suggests a balance between growing earnings and rewarding shareholders. This is a reasonable combination that could hint at some further dividend increases in the future.
The main way most investors will assess a company's dividend prospects is by checking the historical rate of dividend growth. In the last three years, Hibiscus Petroleum Berhad has lifted its dividend by approximately 26% a year on average. It's exciting to see that both earnings and dividends per share have grown rapidly over the past few years.
The Bottom Line
Is Hibiscus Petroleum Berhad an attractive dividend stock, or better left on the shelf? Earnings per share have grown at a nice rate in recent times and over the last year, Hibiscus Petroleum Berhad paid out less than half its earnings and a bit over half its free cash flow. Overall we think this is an attractive combination and worthy of further research.
On that note, you'll want to research what risks Hibiscus Petroleum Berhad is facing. For example, we've found 1 warning sign for Hibiscus Petroleum Berhad that we recommend you consider before investing in the business.
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.
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