There's A Lot To Like About Ddev Plastiks Industries' (NSE:DDEVPLSTIK) Upcoming ₹0.50 Dividend

Regular readers will know that we love our dividends at Simply Wall St, which is why it's exciting to see Ddev Plastiks Industries Limited (NSE:DDEVPLSTIK) is about to trade ex-dividend in the next 3 days. The ex-dividend date is commonly two business days before the record date, which is the cut-off date for shareholders to be present on the company's books to be eligible for a dividend payment. The ex-dividend date is of consequence because whenever a stock is bought or sold, the trade can take two business days or more to settle. Thus, you can purchase Ddev Plastiks Industries' shares before the 20th of February in order to receive the dividend, which the company will pay on the 12th of March.

The company's next dividend payment will be ₹0.50 per share. Last year, in total, the company distributed ₹1.75 to shareholders. Based on the last year's worth of payments, Ddev Plastiks Industries stock has a trailing yield of around 0.6% on the current share price of ₹280.00. 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 Ddev Plastiks Industries has been able to grow its dividends, or if the dividend might be cut.

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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. Ddev Plastiks Industries has a low and conservative payout ratio of just 9.2% of its income after tax. 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. The good news is it paid out just 8.3% 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.

View our latest analysis for Ddev Plastiks Industries

Click here to see how much of its profit Ddev Plastiks Industries paid out over the last 12 months.

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 business enters a downturn and the dividend is cut, the company could see its value fall precipitously. That's why it's comforting to see Ddev Plastiks Industries's earnings have been skyrocketing, up 35% per annum for the past five years. Ddev Plastiks Industries 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.'

Many investors will assess a company's dividend performance by evaluating how much the dividend payments have changed over time. In the past four years, Ddev Plastiks Industries has increased its dividend at approximately 68% a year on average. It's exciting to see that both earnings and dividends per share have grown rapidly over the past few years.

To Sum It Up

Should investors buy Ddev Plastiks Industries for the upcoming dividend? We love that Ddev Plastiks Industries 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. Ddev Plastiks Industries looks solid on this analysis overall, and we'd definitely consider investigating it more closely.

Curious about whether Ddev Plastiks Industries has been able to consistently generate growth? Here's a chart of its historical revenue and earnings growth.

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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.