Regular readers will know that we love our dividends at Simply Wall St, which is why it's exciting to see Poh Huat Resources Holdings Berhad (KLSE:POHUAT) is about to trade ex-dividend in the next 4 days. 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. Meaning, you will need to purchase Poh Huat Resources Holdings Berhad's shares before the 14th of October to receive the dividend, which will be paid on the 30th of October.

The company's next dividend payment will be RM00.02 per share, on the back of last year when the company paid a total of RM0.08 to shareholders. Based on the last year's worth of payments, Poh Huat Resources Holdings Berhad stock has a trailing yield of around 8.4% on the current share price of RM00.95. If you buy this business for its dividend, you should have an idea of whether Poh Huat Resources Holdings Berhad's dividend is reliable and sustainable. That's why we should always check whether the dividend payments appear sustainable, and if the company is growing.

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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. Poh Huat Resources Holdings Berhad paid out 111% of profit in the past year, which we think is typically not sustainable unless there are mitigating characteristics such as unusually strong cash flow or a large cash balance. That said, even highly profitable companies sometimes might not generate enough cash to pay the dividend, which is why we should always check if the dividend is covered by cash flow. It paid out more than half (66%) of its free cash flow in the past year, which is within an average 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 Poh Huat Resources Holdings Berhad fortunately did generate enough cash to fund its dividend. Still, if the company repeatedly paid a dividend greater than its profits, we'd be concerned. Extraordinarily few companies are capable of persistently paying a dividend that is greater than their profits.