Nippon Life India Asset Management Limited (NSE:NAM-INDIA) Looks Interesting, And It's About To Pay A Dividend

Nippon Life India Asset Management Limited (NSE:NAM-INDIA) is about to trade ex-dividend in the next 2 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 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 Nippon Life India Asset Management's shares before the 28th of October to receive the dividend, which will be paid on the 21st of November.

The company's upcoming dividend is ₹9.50 a share, following on from the last 12 months, when the company distributed a total of ₹21.50 per share to shareholders. Based on the last year's worth of payments, Nippon Life India Asset Management stock has a trailing yield of around 2.3% on the current share price of ₹922.60. Dividends are a major contributor to investment returns for long term holders, but only if the dividend continues to be paid. As a result, readers should always check whether Nippon Life India Asset Management has been able to grow its dividends, or if the dividend might be cut.

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Dividends are typically paid out of company income, so if a company pays out more than it earned, its dividend is usually at a higher risk of being cut. Its dividend payout ratio is 87% of profit, which means the company is paying out a majority of its earnings. The relatively limited profit reinvestment could slow the rate of future earnings growth. We'd be concerned if earnings began to decline.

When a company paid out less in dividends than it earned in profit, this generally suggests its dividend is affordable. The lower the % of its profit that it pays out, the greater the margin of safety for the dividend if the business enters a downturn.

View our latest analysis for Nippon Life India Asset Management

Click here to see the company's payout ratio, plus analyst estimates of its future dividends.

Have Earnings And Dividends Been Growing?

Stocks in companies that generate sustainable earnings growth often make the best dividend prospects, as it is easier to lift the dividend when earnings are rising. If earnings decline and the company is forced to cut its dividend, investors could watch the value of their investment go up in smoke. Fortunately for readers, Nippon Life India Asset Management's earnings per share have been growing at 18% a year for the past five years.

Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. In the past nine years, Nippon Life India Asset Management has increased its dividend at approximately 18% a year on average. Both per-share earnings and dividends have both been growing rapidly in recent times, which is great to see.

Final Takeaway

Is Nippon Life India Asset Management an attractive dividend stock, or better left on the shelf? Earnings per share are growing nicely, and Nippon Life India Asset Management is paying out a percentage of its earnings that is around the average for dividend-paying stocks. In summary, Nippon Life India Asset Management appears to have some promise as a dividend stock, and we'd suggest taking a closer look at it.

With that in mind, a critical part of thorough stock research is being aware of any risks that stock currently faces. For example - Nippon Life India Asset Management has 1 warning sign we think you should be aware of.

Generally, we wouldn't recommend just buying the first dividend stock you see. Here's a curated list of interesting stocks that are strong dividend payers.

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