Be Sure To Check Out PIX Transmissions Limited (NSE:PIXTRANS) Before It Goes Ex-Dividend
PIX Transmissions Limited (NSE:PIXTRANS) is about to trade ex-dividend in the next 3 days. The ex-dividend date is usually set to be two business days before the record date, which is the cut-off date on which you must be present on the company's books as a shareholder in order to receive the 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. Accordingly, PIX Transmissions investors that purchase the stock on or after the 14th of July will not receive the dividend, which will be paid on the 21st of August.
The company's next dividend payment will be ₹9.00 per share, and in the last 12 months, the company paid a total of ₹9.00 per share. Based on the last year's worth of payments, PIX Transmissions stock has a trailing yield of around 0.5% on the current share price of ₹1782.30. If you buy this business for its dividend, you should have an idea of whether PIX Transmissions's dividend is reliable and sustainable. As a result, readers should always check whether PIX Transmissions has been able to grow its dividends, or if the dividend might be cut.
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. PIX Transmissions is paying out just 11% of its profit after tax, which is comfortably low and leaves plenty of breathing room in the case of adverse events. A useful secondary check can be to evaluate whether PIX Transmissions generated enough free cash flow to afford its dividend. The good news is it paid out just 8.4% of its free cash flow in the last year.
It's positive to see that PIX Transmissions's dividend is covered by both profits and cash flow, since this is generally a sign that the dividend is sustainable, and a lower payout ratio usually suggests a greater margin of safety before the dividend gets cut.
See our latest analysis for PIX Transmissions
Click here to see how much of its profit PIX Transmissions 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. Investors love dividends, so if earnings fall and the dividend is reduced, expect a stock to be sold off heavily at the same time. For this reason, we're glad to see PIX Transmissions's earnings per share have risen 10% per annum over the last five years. Earnings per share have been growing rapidly and the company is retaining a majority of its earnings within the business. Fast-growing businesses that are reinvesting heavily are enticing from a dividend perspective, especially since they can often increase the payout ratio later.
Many investors will assess a company's dividend performance by evaluating how much the dividend payments have changed over time. In the past 10 years, PIX Transmissions has increased its dividend at approximately 25% a year on average. Both per-share earnings and dividends have both been growing rapidly in recent times, which is great to see.
The Bottom Line
Should investors buy PIX Transmissions for the upcoming dividend? PIX Transmissions has grown its earnings per share while simultaneously reinvesting in the business. Unfortunately it's cut the dividend at least once in the past 10 years, but the conservative payout ratio makes the current dividend look sustainable. It's a promising combination that should mark this company worthy of closer attention.
On that note, you'll want to research what risks PIX Transmissions is facing. Every company has risks, and we've spotted 1 warning sign for PIX Transmissions you should know about.
If you're in the market for strong dividend payers, we recommend checking our selection of top dividend stocks.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
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.