Only One Day Left To Cash In On Indef Manufacturing's (NSE:BAJAJINDEF) Dividend
Readers hoping to buy Indef Manufacturing Limited (NSE:BAJAJINDEF) for its dividend will need to make their move shortly, as the stock is about to trade ex-dividend. 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. 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. Accordingly, Indef Manufacturing investors that purchase the stock on or after the 5th of August will not receive the dividend, which will be paid on the 11th of September.
The company's next dividend payment will be ₹2.00 per share. Last year, in total, the company distributed ₹2.00 to shareholders. Based on the last year's worth of payments, Indef Manufacturing has a trailing yield of 0.9% on the current stock price of ₹234.70. If you buy this business for its dividend, you should have an idea of whether Indef Manufacturing's dividend is reliable and sustainable. As a result, readers should always check whether Indef Manufacturing 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. Indef Manufacturing paid out a comfortable 27% of its profit last year. 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. Thankfully its dividend payments took up just 35% of the free cash flow it generated, which is a comfortable payout ratio.
It's positive to see that Indef Manufacturing'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 Indef Manufacturing
Click here to see how much of its profit Indef Manufacturing paid out over the last 12 months.
Have Earnings And Dividends Been Growing?
Businesses with shrinking earnings are tricky from a dividend perspective. If business enters a downturn and the dividend is cut, the company could see its value fall precipitously. From this viewpoint, it's unfortunate that earnings per share have declined 7.1% over the last year.
Given that Indef Manufacturing has only been paying a dividend for a year, there's not much of a past history to draw insight from.
To Sum It Up
From a dividend perspective, should investors buy or avoid Indef Manufacturing? Indef Manufacturing has comfortably low cash and profit payout ratios, which may mean the dividend is sustainable even in the face of a sharp decline in earnings per share. Still, we consider declining earnings to be a warning sign. While it does have some good things going for it, we're a bit ambivalent and it would take more to convince us of Indef Manufacturing's dividend merits.
In light of that, while Indef Manufacturing has an appealing dividend, it's worth knowing the risks involved with this stock. Our analysis shows 4 warning signs for Indef Manufacturing and you should be aware of them before buying any shares.
A common investing mistake is buying the first interesting stock you see. Here you can find a full list of high-yield dividend stocks.
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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.