Taliworks Corporation Berhad Approaches Ex-Dividend Date: Should You Buy Now?

Taliworks Corporation Berhad (KLSE:TALIWRK) is heading into its ex-dividend date on June 11, meaning investors who buy shares on or after that day won’t qualify for the upcoming payout. The dividend of RM0.0025 per share is scheduled to be paid on June 30, adding to the RM0.022 per share distributed over the past 12 months. At the current share price of RM0.395, that works out to a trailing yield of 5.7% – a level that typically attracts income-focused investors in a low-rate environment. But as with any dividend play, sustainability is the real question.

On the surface, the numbers look solid. Taliworks paid out only 49% of its earnings and an identical 49% of its free cash flow as dividends over the last year. That leaves plenty of room for reinvestment and a cushion if earnings stumble. Earnings per share have also grown at an average of 6.6% annually over the past five years, helped by management reinvesting more than half of profits back into the business. For a water and infrastructure company operating in Malaysia’s regulated utility space, that kind of steady growth is not unusual, but it does reinforce the dividend’s foundation.

However, there’s a disconnect. Despite rising earnings, Taliworks’ dividend per share has actually shrunk at a compound rate of 7.3% per year over the last decade. That’s a red flag for long-term income seekers. It suggests that while the business is generating more profit, the board has chosen to allocate a smaller portion to shareholders – possibly to fund expansion, reduce debt, or prepare for regulatory changes. The trend is worth monitoring, especially if the company shifts its capital allocation policy.

Analysts note that Taliworks’ payout ratio is low enough to absorb a moderate earnings dip, but the declining dividend trajectory means investors shouldn’t count on rising income. For those looking to lock in a 5.7% yield for a year or two, the stock might be appealing. But for anyone building a portfolio of growing dividends, the lack of dividend growth over the past decade is a clear warning sign.

One more caution: Taliworks Corporation Berhad carries a warning flag that investors should review before buying. As with any investment, it’s essential to look beyond the yield and understand the risks specific to the company and its sector.

This article is for informational purposes only and does not constitute financial advice. Always conduct your own research or consult a licensed advisor before making investment decisions.