Havells India Limited (NSE: HAVELLS) is on the verge of ex-dividend, and it reports a yield of 0.7%
Readers wishing to buy Havells India Limited (NSE: HAVELLS) for its dividend will have to act shortly, as the stock is about to trade ex-dividend. The ex-dividend date occurs one day before the registration date which is the day on which shareholders must be entered in the books of the company to receive a dividend. The ex-dividend date is important because the settlement process involves two full business days. So if you miss this date, you will not appear on the books of the company on the date of registration. This means that you will have to buy the Havells India shares before June 17th to receive the dividend, which will be paid on July 30th.
The company’s next dividend will be 3.50.50 per share, and over the past 12 months, the company has paid a total of 7.00 per share. Based on the value of last year’s payouts, Havells India has a rolling 0.7% return on the current share price of 1017.1. If you buy this company for its dividend, you should know if the Havells India dividend is reliable and sustainable. You have to see if the dividend is covered by profits and if it increases.
Check out our latest analysis for Havells India
Dividends are usually paid out of business income, so if a business pays more than it earned, its dividend is usually at risk of being reduced. This is why it is good to see Havells India paying a modest 39% of its income. Yet cash flow is still more important than earnings in valuing a dividend, so we need to see if the company has generated enough cash to pay for its distribution. Fortunately, she has only paid out 46% of her free cash flow in the past year.
It is positive to see that Havells India’s dividend is covered by both earnings and cash flow, as this is usually a sign that the dividend is sustainable, and a lower payout ratio usually suggests a higher. margin of safety before the dividend is cut.
Click here to view the company’s payout ratio, as well as analysts’ estimates of its future dividends.
Have profits and dividends increased?
Companies with declining profits are riskier for dividend shareholders. If profits fall and the company is forced to cut its dividend, investors could see the value of their investment go up in smoke. So we’re not very excited that Havells India’s profits have fallen 4.3% per year over the past five years.
Most investors primarily assess a company’s dividend prospects by checking the historical rate of dividend growth. Havells India has experienced dividend growth of 30% per year on average over the past 10 years.
Is Havells India worth buying for its dividend? Havells India has comfortably low cash flow and earnings payout ratios, which can mean the dividend is sustainable even in the face of a sharp drop in earnings per share. Nonetheless, we see falling profits as a warning sign. All things considered, we are not particularly excited about Havells India from a dividend perspective.
Although it is tempting to invest in Havells India for dividends only, you should always be aware of the risks involved. In terms of investment risks, we have identified 1 warning sign with Havells India and understanding them should be part of your investment process.
However, we don’t recommend simply buying the first dividend stock you see. Here is a list of interesting dividend paying stocks with a yield above 2% and a dividend coming soon.
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This Simply Wall St article is general in nature. It does not constitute a recommendation to buy or sell shares and does not take into account your goals or your financial situation. Our aim is to bring you long-term, targeted analysis based on fundamental data. Note that our analysis may not take into account the latest announcements from price sensitive companies or qualitative documents. Simply Wall St has no position in the mentioned stocks.
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