Only Three Days Left To Cash In On Ugar Sugar Works' (NSE:UGARSUGAR) Dividend

Regular readers will know that we love our dividends at Simply Wall St, which is why it's exciting to see The Ugar Sugar Works Limited (NSE:UGARSUGAR) is about to trade ex-dividend in the next 3 days. The ex-dividend date generally occurs two days 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. The ex-dividend date is important because any transaction on a stock needs to have been settled before the record date in order to be eligible for a dividend. Therefore, if you purchase Ugar Sugar Works' shares on or after the 29th of July, you won't be eligible to receive the dividend, when it is paid on the 4th of September.

The company's next dividend payment will be ₹0.10 per share, and in the last 12 months, the company paid a total of ₹0.10 per share. Based on the last year's worth of payments, Ugar Sugar Works stock has a trailing yield of around 0.3% on the current share price of ₹39.72. Dividends are an important source of income to many shareholders, but the health of the business is crucial to maintaining those dividends. 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. Ugar Sugar Works is paying out just 8.3% of its profit after tax, which is comfortably low and leaves plenty of breathing room in the case of adverse events.

Check out our latest analysis for Ugar Sugar Works

Click here to see how much of its profit Ugar Sugar Works paid out over the last 12 months.

Have Earnings And Dividends Been Growing?

Businesses with shrinking earnings are tricky from a dividend perspective. If business enters a downturn and the dividend is cut, the company could see its value fall precipitously. So we're not too excited that Ugar Sugar Works's earnings are down 4.4% a year over the past five years.

Many investors will assess a company's dividend performance by evaluating how much the dividend payments have changed over time. Ugar Sugar Works's dividend payments per share have declined at 4.0% per year on average over the past 10 years, which is uninspiring. While it's not great that earnings and dividends per share have fallen in recent years, we're encouraged by the fact that management has trimmed the dividend rather than risk over-committing the company in a risky attempt to maintain yields to shareholders.

The Bottom Line

Has Ugar Sugar Works got what it takes to maintain its dividend payments? Ugar Sugar Works's earnings per share are down over the past five years, although it has the cushion of a low payout ratio, which would suggest a cut to the dividend is relatively unlikely. We think this is a pretty attractive combination, and would be interested in investigating Ugar Sugar Works more closely.

In light of that, while Ugar Sugar Works has an appealing dividend, it's worth knowing the risks involved with this stock. Every company has risks, and we've spotted 3 warning signs for Ugar Sugar Works (of which 2 are significant!) you should know about.

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.