Is It Smart To Buy De Nora India Limited (NSE:DENORA) Before It Goes Ex-Dividend?
Readers hoping to buy De Nora India Limited (NSE:DENORA) for its dividend will need to make their move shortly, as the stock is about to trade ex-dividend. The ex-dividend date is two business days before a company's record date in most cases, which is the date on which the company determines which shareholders are entitled to receive a dividend. It is important to be aware of the ex-dividend date because any trade on the stock needs to have been settled on or before the record date. In other words, investors can purchase De Nora India's shares before the 16th of September in order to be eligible for the dividend, which will be paid on the 23rd of October.
The company's next dividend payment will be ₹4.00 per share, and in the last 12 months, the company paid a total of ₹4.00 per share. Based on the last year's worth of payments, De Nora India stock has a trailing yield of around 0.5% on the current share price of ₹798.45. If you buy this business for its dividend, you should have an idea of whether De Nora India's dividend is reliable and sustainable. As a result, readers should always check whether De Nora India has been able to grow its dividends, or if the dividend might be cut.
If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. De Nora India has a low and conservative payout ratio of just 23% of its income after tax.
See our latest analysis for De Nora India
Click here to see how much of its profit De Nora India 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. Investors love dividends, so if earnings fall and the dividend is reduced, expect a stock to be sold off heavily at the same time. Fortunately for readers, De Nora India's earnings per share have been growing at 17% a year for the past five years. Earnings per share have been growing rapidly and the company is retaining a majority of its earnings within the business. This will make it easier to fund future growth efforts and we think this is an attractive combination - plus the dividend can always be increased later.
The main way most investors will assess a company's dividend prospects is by checking the historical rate of dividend growth. It looks like the De Nora India dividends are largely the same as they were 10 years ago.
To Sum It Up
Has De Nora India got what it takes to maintain its dividend payments? Companies like De Nora India that are growing rapidly and paying out a low fraction of earnings, are usually reinvesting heavily in their business. This strategy can add significant value to shareholders over the long term - as long as it's done without issuing too many new shares. Overall, De Nora India looks like a promising dividend stock in this analysis, and we think it would be worth investigating further.
On that note, you'll want to research what risks De Nora India is facing. To that end, you should learn about the 3 warning signs we've spotted with De Nora India (including 1 which is potentially serious).
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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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.