Is It Smart To Buy DAM Capital Advisors Limited (NSE:DAMCAPITAL) Before It Goes Ex-Dividend?
DAM Capital Advisors Limited (NSE:DAMCAPITAL) stock is about to trade ex-dividend in 3 days. 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. 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. Therefore, if you purchase DAM Capital Advisors' shares on or after the 28th of August, you won't be eligible to receive the dividend, when it is paid on the 8th of October.
The company's upcoming dividend is ₹1.00 a share, following on from the last 12 months, when the company distributed a total of ₹1.00 per share to shareholders. Last year's total dividend payments show that DAM Capital Advisors has a trailing yield of 0.7% on the current share price of ₹144.47. If you buy this business for its dividend, you should have an idea of whether DAM Capital Advisors's dividend is reliable and sustainable. So we need to check whether the dividend payments are covered, and if earnings are growing.
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. DAM Capital Advisors paid out just 9.7% of its profit last year, which we think is conservatively low and leaves plenty of margin for unexpected circumstances.
Generally speaking, the lower a company's payout ratios, the more resilient its dividend usually is.
Check out our latest analysis for DAM Capital Advisors
Click here to see how much of its profit DAM Capital Advisors 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. That's why it's comforting to see DAM Capital Advisors's earnings have been skyrocketing, up 24% per annum for the past five years.
Unfortunately DAM Capital Advisors has only been paying a dividend for a year or so, so there's not much of a history to draw insight from.
Final Takeaway
Has DAM Capital Advisors got what it takes to maintain its dividend payments? Companies like DAM Capital Advisors that are growing rapidly and paying out a low fraction of earnings, are usually reinvesting heavily in their business. This is one of the most attractive investment combinations under this analysis, as it can create substantial value for investors over the long run. Overall, DAM Capital Advisors looks like a promising dividend stock in this analysis, and we think it would be worth investigating further.
Want to learn more about DAM Capital Advisors? Here's a visualisation of its historical rate of revenue and earnings growth.
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.