Rushil Décor Limited (NSE:RUSHIL) Is About To Go Ex-Dividend, And It Pays A 0.3% Yield
Regular readers will know that we love our dividends at Simply Wall St, which is why it's exciting to see Rushil Décor Limited (NSE:RUSHIL) is about to trade ex-dividend in the next 3 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. 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. Therefore, if you purchase Rushil Décor's shares on or after the 8th of September, you won't be eligible to receive the dividend, when it is paid on the 26th of October.
The company's upcoming dividend is ₹0.05 a share, following on from the last 12 months, when the company distributed a total of ₹0.05 per share to shareholders. Looking at the last 12 months of distributions, Rushil Décor has a trailing yield of approximately 0.3% on its current stock price of ₹16.18. Dividends are an important source of income to many shareholders, but the health of the business is crucial to maintaining those dividends. So we need to investigate whether Rushil Décor can afford its dividend, and if the dividend could grow.
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. Rushil Décor paid out just 22% of its profit last year, which we think is conservatively low and leaves plenty of margin for unexpected circumstances. 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 14% of its free cash flow as dividends last year, which is conservatively low.
It's positive to see that Rushil Décor'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.
View our latest analysis for Rushil Décor
Click here to see how much of its profit Rushil Décor paid out over the last 12 months.
Have Earnings And Dividends Been Growing?
Stocks with flat earnings can still be attractive dividend payers, but it is important to be more conservative with your approach and demand a greater margin for safety when it comes to dividend sustainability. 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 Rushil Décor's earnings are effectively flat over the past five years. We'd take that over an earnings decline any day, but in the long run, the best dividend stocks all grow their earnings per share.
The main way most investors will assess a company's dividend prospects is by checking the historical rate of dividend growth. Rushil Décor has seen its dividend decline 6.7% per annum on average over the past 10 years, which is not great to see.
To Sum It Up
Is Rushil Décor an attractive dividend stock, or better left on the shelf? While it's not great to see that earnings per share are effectively flat over the 10-year period we checked, at least the payout ratios are low and conservative. To summarise, Rushil Décor looks okay on this analysis, although it doesn't appear a stand-out opportunity.
On that note, you'll want to research what risks Rushil Décor is facing. Every company has risks, and we've spotted 4 warning signs for Rushil Décor (of which 1 is potentially serious!) you should know about.
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.