Here's What We Like About AMJ Land Holdings' (NSE:AMJLAND) Upcoming Dividend
It looks like AMJ Land Holdings Limited (NSE:AMJLAND) is about to go ex-dividend in the next 3 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 of consequence because whenever a stock is bought or sold, the trade can take two business days or more to settle. This means that investors who purchase AMJ Land Holdings' shares on or after the 24th of August will not receive the dividend, which will be paid on the 2nd of October.
The company's upcoming dividend is ₹0.20 a share, following on from the last 12 months, when the company distributed a total of ₹0.20 per share to shareholders. Looking at the last 12 months of distributions, AMJ Land Holdings has a trailing yield of approximately 0.5% on its current stock price of ₹38.66. Dividends are a major contributor to investment returns for long term holders, but only if the dividend continues to be paid. So we need to investigate whether AMJ Land Holdings can afford its dividend, and if the dividend could grow.
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. AMJ Land Holdings has a low and conservative payout ratio of just 5.5% of its income after tax. Yet cash flows are even more important than profits for assessing a dividend, so we need to see if the company generated enough cash to pay its distribution. The good news is it paid out just 10% of its free cash flow in the last year.
It's positive to see that AMJ Land Holdings's dividend is covered by both profits and cash flow, since this is generally a sign that the dividend is sustainable, and a lower payout ratio usually suggests a greater margin of safety before the dividend gets cut.
Check out our latest analysis for AMJ Land Holdings
Click here to see how much of its profit AMJ Land Holdings 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. 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 encouraging to see AMJ Land Holdings has grown its earnings rapidly, up 27% a year for the past five years. AMJ Land Holdings earnings per share have been sprinting ahead like the Road Runner at a track and field day; scarcely stopping even for a cheeky "beep-beep". We also like that it is reinvesting most of its profits in its business.'
Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. AMJ Land Holdings's dividend payments are effectively flat on where they were 10 years ago.
To Sum It Up
From a dividend perspective, should investors buy or avoid AMJ Land Holdings? It's great that AMJ Land Holdings is growing earnings per share while simultaneously paying out a low percentage of both its earnings and cash flow. It's disappointing to see the dividend has been cut at least once in the past, but as things stand now, the low payout ratio suggests a conservative approach to dividends, which we like. It's a promising combination that should mark this company worthy of closer attention.
On that note, you'll want to research what risks AMJ Land Holdings is facing. For example, we've found 2 warning signs for AMJ Land Holdings that we recommend you consider before investing in the business.
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.