Info Edge (India) Limited (NSE:NAUKRI) Goes Ex-Dividend Soon
Info Edge (India) Limited (NSE:NAUKRI) stock is about to trade ex-dividend in three days. Typically, the ex-dividend date is two business days before the record date, which is the date on which a company determines the shareholders eligible to receive a dividend. The ex-dividend date is important because any transaction on a stock needs to have been settled before the record date in order to be eligible for a dividend. In other words, investors can purchase Info Edge (India)'s shares before the 24th of July in order to be eligible for the dividend, which will be paid on the 24th of September.
The company's upcoming dividend is ₹3.60 a share, following on from the last 12 months, when the company distributed a total of ₹8.40 per share to shareholders. Calculating the last year's worth of payments shows that Info Edge (India) has a trailing yield of 0.7% on the current share price of ₹1187.25. If you buy this business for its dividend, you should have an idea of whether Info Edge (India)'s dividend is reliable and sustainable. As a result, readers should always check whether Info Edge (India) has been able to grow its dividends, or if the dividend might be cut.
Dividends are usually paid out of company profits, so if a company pays out more than it earned then its dividend is usually at greater risk of being cut. That's why it's good to see Info Edge (India) paying out a modest 38% of its earnings. Yet cash flow is typically more important than profit for assessing dividend sustainability, so we should always check if the company generated enough cash to afford its dividend. It paid out more than half (54%) of its free cash flow in the past year, which is within an average range for most companies.
It's encouraging to see that the dividend is covered by both profit and cash flow. This generally suggests the dividend is sustainable, as long as earnings don't drop precipitously.
See our latest analysis for Info Edge (India)
Click here to see the company's payout ratio, plus analyst estimates of its future dividends.
Have Earnings And Dividends Been Growing?
Companies that aren't growing their earnings can still be valuable, but it is even more important to assess the sustainability of the dividend if it looks like the company will struggle to grow. Investors love dividends, so if earnings fall and the dividend is reduced, expect a stock to be sold off heavily at the same time. It's not encouraging to see that Info Edge (India)'s earnings are effectively flat over the past five years. Better than seeing them fall off a cliff, for sure, but the best dividend stocks grow their earnings meaningfully over the long run.
The main way most investors will assess a company's dividend prospects is by checking the historical rate of dividend growth. In the past 10 years, Info Edge (India) has increased its dividend at approximately 30% a year on average.
To Sum It Up
Is Info Edge (India) worth buying for its dividend? Its earnings per share are effectively flat in recent times. The company paid out less than half its income and more than half its cash flow as dividends to shareholders. Overall, it's hard to get excited about Info Edge (India) from a dividend perspective.
However if you're still interested in Info Edge (India) as a potential investment, you should definitely consider some of the risks involved with Info Edge (India). Our analysis shows 1 warning sign for Info Edge (India) and you should be aware of this before buying any shares.
If you're in the market for strong dividend payers, we recommend checking our selection of top 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.