Three Days Left Until Kotyark Industries Limited (NSE:KOTYARK) Trades Ex-Dividend
Kotyark Industries Limited (NSE:KOTYARK) stock is about to trade ex-dividend in three days. The ex-dividend date generally occurs two days before the record date, which is the day on which shareholders need to be on the company's books in order 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. Thus, you can purchase Kotyark Industries' shares before the 14th of August in order to receive the dividend, which the company will pay on the 21st of September.
The company's next dividend payment will be ₹5.00 per share. Last year, in total, the company distributed ₹0.45 to shareholders. Last year's total dividend payments show that Kotyark Industries has a trailing yield of 1.1% on the current share price of ₹40.68. Dividends are a major contributor to investment returns for long term holders, but only if the dividend continues to be paid. We need to see whether the dividend is covered by earnings and if it's growing.
Dividends are typically paid from company earnings. If a company pays more in dividends than it earned in profit, then the dividend could be unsustainable. Kotyark Industries paid out a comfortable 27% of its profit last year. A useful secondary check can be to evaluate whether Kotyark Industries generated enough free cash flow to afford its dividend. Kotyark Industries paid a dividend despite reporting negative free cash flow last year. That's typically a bad combination and - if this were more than a one-off - not sustainable.
Check out our latest analysis for Kotyark Industries
Click here to see how much of its profit Kotyark Industries paid out over the last 12 months.
Have Earnings And Dividends Been Growing?
Stocks in companies that generate sustainable earnings growth often make the best dividend prospects, as it is easier to lift the dividend when earnings are rising. If earnings fall far enough, the company could be forced to cut its dividend. It's encouraging to see Kotyark Industries has grown its earnings rapidly, up 38% a year for the past five years.
The main way most investors will assess a company's dividend prospects is by checking the historical rate of dividend growth. In the past four years, Kotyark Industries has increased its dividend at approximately 26% a year on average. It's great to see earnings per share growing rapidly over several years, and dividends per share growing right along with it.
Final Takeaway
Has Kotyark Industries got what it takes to maintain its dividend payments? We're glad to see the company has been improving its earnings per share while also paying out a low percentage of income. However, it's not great to see it paying out what we see as an uncomfortably high percentage of its cash flow. Overall we're not hugely bearish on the stock, but there are likely better dividend investments out there.
In light of that, while Kotyark Industries has an appealing dividend, it's worth knowing the risks involved with this stock. Our analysis shows 2 warning signs for Kotyark Industries and you should be aware of these 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.