Readers hoping to buy Nestlé (Malaysia) Berhad (KLSE:NESTLE) for its dividend will need to make their move shortly, as the stock is about to trade ex-dividend. 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. Therefore, if you purchase Nestlé (Malaysia) Berhad’s shares on or after the 13th of April, you won’t be eligible to receive the dividend, when it is paid on the 13th of May.
The company’s next dividend payment will be RM00.90 per share. Last year, in total, the company distributed RM2.20 to shareholders. Based on the last year’s worth of payments, Nestlé (Malaysia) Berhad has a trailing yield of 2.2% on the current stock price of RM0101.00. If you buy this business for its dividend, you should have an idea of whether Nestlé (Malaysia) Berhad’s dividend is reliable and sustainable. So we need to check whether the dividend payments are covered, and if earnings are 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. Last year Nestlé (Malaysia) Berhad paid out 101% of its profits as dividends to shareholders, suggesting the dividend is not well covered by earnings. 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. Over the last year it paid out 54% of its free cash flow as dividends, within the usual range for most companies.
It’s disappointing to see that the dividend was not covered by profits, but cash is more important from a dividend sustainability perspective, and Nestlé (Malaysia) Berhad fortunately did generate enough cash to fund its dividend. If executives were to continue paying more in dividends than the company reported in profits, we’d view this as a warning sign. Extraordinarily few companies are capable of persistently paying a dividend that is greater than their profits.
View our latest analysis for Nestlé (Malaysia) Berhad
Click here to see the company’s payout ratio, plus analyst estimates of its future dividends.
Story Continues
KLSE:NESTLE Historic Dividend April 8th 2026 Have Earnings And Dividends Been Growing?
Stocks with flat earnings can still be attractive dividend payers, but it is important to be more conservative with your approach and demand a greater margin for safety when it comes to dividend sustainability. If earnings decline and the company is forced to cut its dividend, investors could watch the value of their investment go up in smoke. It’s not encouraging to see that Nestlé (Malaysia) Berhad’s earnings are effectively flat over the past five years. It’s better than seeing them drop, certainly, but over the long term, all of the best dividend stocks are able to meaningfully grow their earnings per share.
Many investors will assess a company’s dividend performance by evaluating how much the dividend payments have changed over time. Nestlé (Malaysia) Berhad has seen its dividend decline 0.9% per annum on average over the past 10 years, which is not great to see.
The Bottom Line
Has Nestlé (Malaysia) Berhad got what it takes to maintain its dividend payments? Earnings per share have been flat in recent times, which is, we suppose, better than seeing them shrink. Plus, Nestlé (Malaysia) Berhad’s paying out a high percentage of its earnings and more than half its cash flow. It’s not the most attractive proposition from a dividend perspective, and we’d probably give this one a miss for now.
With that being said, if you’re still considering Nestlé (Malaysia) Berhad as an investment, you’ll find it beneficial to know what risks this stock is facing. Our analysis shows 1 warning sign for Nestlé (Malaysia) Berhad and you should be aware of it before buying any shares.
If you’re in the market for strong dividend payers, we recommend checking our selection of top dividend stocks.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
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.