Should Income Investors Look At Pilani Investment and Industries Corporation Limited (NSE:PILANIINVS) Before Its Ex-Dividend?
Regular readers will know that we love our dividends at Simply Wall St, which is why it's exciting to see Pilani Investment and Industries Corporation Limited (NSE:PILANIINVS) is about to trade ex-dividend in the next three 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. 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 Pilani Investment and Industries' shares before the 23rd of June in order to be eligible for the dividend, which will be paid on the 30th of July.
The company's next dividend payment will be ₹15.00 per share. Last year, in total, the company distributed ₹15.00 to shareholders. Last year's total dividend payments show that Pilani Investment and Industries has a trailing yield of 0.3% on the current share price of ₹5198.60. If you buy this business for its dividend, you should have an idea of whether Pilani Investment and Industries's dividend is reliable and sustainable. That's why we should always check whether the dividend payments appear sustainable, and if the company is growing.
If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. Pilani Investment and Industries paid out just 17% 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.
View our latest analysis for Pilani Investment and Industries
Have Earnings And Dividends Been Growing?
When earnings decline, dividend companies become much harder to analyse and own safely. If earnings fall far enough, the company could be forced to cut its dividend. With that in mind, we're discomforted by Pilani Investment and Industries's 11% per annum decline in earnings in the past five years. When earnings per share fall, the maximum amount of dividends that can be paid also falls.
Many investors will assess a company's dividend performance by evaluating how much the dividend payments have changed over time. Pilani Investment and Industries's dividend payments per share have declined at 1.7% per year on average over the past 10 years, which is uninspiring.
The Bottom Line
From a dividend perspective, should investors buy or avoid Pilani Investment and Industries? Earnings per share have shrunk noticeably in recent years, although we like that the company has a low payout ratio. This could suggest a cut to the dividend may not be a major risk in the near future. In sum this is a middling combination, and we find it hard to get excited about the company from a dividend perspective.
If you want to look further into Pilani Investment and Industries, it's worth knowing the risks this business faces. Every company has risks, and we've spotted 1 warning sign for Pilani Investment and Industries you should know about.
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.