Dividend Investors: Don’t Be Too Quick To Buy Matrix Concepts Holdings Berhad (KLSE: MATRIX) For Its Upcoming Dividend

Some investors rely on dividends to grow their wealth, and if you’re one of those dividend sleuths, you might be intrigued to know that Matrix Concepts Holdings Berhad (KLSE:MATRIX) is set to go ex-dividend in just four days. The ex-dividend date is usually one business day before the record date which is the latest date by which you must be present on the books of the company as a shareholder in order to receive the dividend. The ex-dividend date is important because each time a stock is bought or sold, the transaction takes at least two business days to settle. So, you can buy shares of Matrix Concepts Holdings Berhad before September 13 in order to receive the dividend, which the company will pay on October 6.

The company’s next dividend payment will be RM0.03 per share, and over the past 12 months the company has paid a total of RM0.13 per share. Last year’s total dividend payouts show that Matrix Concepts Holdings Berhad has a yield of 5.2% on the current share price of MYR 2.39. If you’re buying this company for its dividend, you should get an idea of ​​the reliability and sustainability of Matrix Concepts Holdings Berhad’s dividend. That’s why we always have to check if the dividend payouts seem sustainable and if the business is growing.

Check out our latest analysis for Matrix Concepts Holdings Berhad

If a company pays out more dividends than it has earned, the dividend may become unsustainable – a less than ideal situation. Matrix Concepts Holdings Berhad paid out more than half (51%) of its earnings last year, which is a regular payout ratio for most companies. Still, cash flow is even more important than earnings in evaluating a dividend, so we need to see if the company has generated enough cash to pay its distribution. Over the past year, it has paid out 114% of its free cash flow as dividends, which is uncomfortably high. We’re curious why the company paid out more money than it generated last year, as this may be one of the first signs that a dividend may be unsustainable.

While Matrix Concepts Holdings Berhad’s dividends were covered by the company’s reported earnings, cash is a bit more important, so it’s not nice to see that the company hasn’t generated enough cash to pay its dividend. Cash is king, as they say, and if Matrix Concepts Holdings Berhad were to repeatedly pay dividends that are not well covered by cash flow, we would consider that a warning sign.

Click here to see the company’s payout ratio, as well as analysts’ estimates of its future dividends.

KLSE: MATRIX Historic dividend September 8, 2022

Have earnings and dividends increased?

Stocks with stable earnings can still be attractive dividend payers, but it’s important to be more conservative in your approach and demand a greater margin of safety when it comes to dividend sustainability. Investors love dividends, so if earnings fall and the dividend is cut, expect a stock to sell heavily at the same time. It is not encouraging to see that the profits of Matrix Concepts Holdings Berhad have indeed been stable over the past five years. It’s better than seeing them fall, sure, but over the long term, all the best dividend-paying stocks have the potential to significantly increase their earnings per share. Earnings have increased somewhat, but we are concerned that dividend payments have consumed most of the company’s cash flow over the past year.

Another key way to gauge a company’s dividend outlook is to measure its historical rate of dividend growth. It looks like Matrix Concepts Holdings Berhad’s dividends are largely the same as nine years ago.

The essential

Did Matrix Concepts Holdings Berhad get what it takes to maintain its dividend payments? In addition to stable profits, Matrix Concepts Holdings Berhad pays out a reasonable percentage of its profits in the form of profits. However, the dividend was not well covered by free cash flow. Overall, it doesn’t seem like the most suitable dividend-paying stock for a long-term investor.

That being said, if you still consider Matrix Concepts Holdings Berhad as an investment, you will find it useful to know what risks this stock faces. To help you, we found 1 warning sign for Matrix Concepts Holdings Berhad which you should be aware of before investing in their stocks.

A common investment mistake is to buy the first good stock you see. Here you can find a complete list of high yielding dividend stocks.

This Simply Wall St article is general in nature. We provide commentary based on historical data and analyst forecasts only using unbiased methodology and our articles are not intended to be financial advice. It is not a recommendation to buy or sell stocks and does not take into account your objectives or financial situation. Our goal is to bring you targeted long-term analysis based on fundamental data. Note that our analysis may not take into account the latest announcements from price-sensitive companies or qualitative materials. Simply Wall St has no position in the stocks mentioned.

Calculation of discounted cash flows for each share

Simply Wall St performs a detailed calculation of discounted cash flow every 6 hours for every stock in the market, so if you want to find the intrinsic value of any company, just search here. It’s free.

About Florence L. Silvia

Check Also

Risks to shareholder returns are high at these prices for Golden Matrix Group, Inc. (NASDAQ: GMGI)

Golden Matrix Group, Inc. (NASDAQ:GMGI) a price/earnings ratio (or “P/E”) of 58.5x could give the …