Be Sure To Check Out Anantam Highways Trust (NSE:ANANTAM) Before It Goes Ex-Dividend

Readers hoping to buy Anantam Highways Trust (NSE:ANANTAM) for its dividend will need to make their move shortly, as the stock is about to trade ex-dividend. Typically, the ex-dividend date is two business days before the record date, which is the date on which a company determines the shareholders eligible 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. This means that investors who purchase Anantam Highways Trust's shares on or after the 27th of October will not receive the dividend, which will be paid on the 3rd of November.

The upcoming dividend for Anantam Highways Trust is ₹2.75 per share. Dividends are an important source of income to many shareholders, but the health of the business is crucial to maintaining those dividends. We need to see whether the dividend is covered by earnings and if it's growing.

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Dividends are usually paid out of company profits, so if a company pays out more than it earned then its dividend is usually at greater risk of being cut. Anantam Highways Trust has a low and conservative payout ratio of just 13% of its income after tax. 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. The good news is it paid out just 4.8% of its free cash flow in the last year.

It's encouraging to see that the dividend is covered by both profit and cash flow. This generally suggests the dividend is sustainable, as long as earnings don't drop precipitously.

Check out our latest analysis for Anantam Highways Trust

Click here to see how much of its profit Anantam Highways Trust paid out over the last 12 months.

Have Earnings And Dividends Been Growing?

Businesses with strong growth prospects usually make the best dividend payers, because it's easier to grow dividends when earnings per share are improving. If business enters a downturn and the dividend is cut, the company could see its value fall precipitously. Anantam Highways Trust earnings per share have been sprinting ahead like the Road Runner at a track and field day; scarcely stopping even for a cheeky "beep-beep". We also like that it is reinvesting most of its profits in its business.'

We'd also point out that Anantam Highways Trust issued a meaningful number of new shares in the past year. It's hard to grow dividends per share when a company keeps creating new shares.

This is Anantam Highways Trust's first year of paying a regular dividend, so it doesn't have much of a history yet to compare to.

The Bottom Line

Is Anantam Highways Trust worth buying for its dividend? We love that Anantam Highways Trust is growing earnings per share while simultaneously paying out a low percentage of both its earnings and cash flow. These characteristics suggest the company is reinvesting in growing its business, while the conservative payout ratio also implies a reduced risk of the dividend being cut in the future. There's a lot to like about Anantam Highways Trust, and we would prioritise taking a closer look at it.

While it's tempting to invest in Anantam Highways Trust for the dividends alone, you should always be mindful of the risks involved. For example, we've found 1 warning sign for Anantam Highways Trust that we recommend you consider before investing in the business.

If you're in the market for strong dividend payers, we recommend checking our selection of top dividend stocks.

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