Only Three Days Left To Cash In On Satia Industries' (NSE:SATIA) Dividend
It looks like Satia Industries Limited (NSE:SATIA) is about to go 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. The ex-dividend date is important as the process of settlement involves at least two full business days. So if you miss that date, you would not show up on the company's books on the record date. Thus, you can purchase Satia Industries' shares before the 23rd of September in order to receive the dividend, which the company will pay on the 30th of October.
The company's next dividend payment will be ₹0.40 per share, and in the last 12 months, the company paid a total of ₹0.40 per share. Based on the last year's worth of payments, Satia Industries stock has a trailing yield of around 0.6% on the current share price of ₹68.46. If you buy this business for its dividend, you should have an idea of whether Satia Industries's dividend is reliable and sustainable. As a result, readers should always check whether Satia Industries 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. Satia Industries paid out just 9.8% of its profit last year, which we think is conservatively low and leaves plenty of margin for unexpected circumstances. Given that the company reported a loss last year, we now need to see if it generated enough free cash flow to fund the dividend. If Satia Industries didn't generate enough cash to pay the dividend, then it must have either paid from cash in the bank or by borrowing money, neither of which is sustainable in the long term. It paid out 10.0% of its free cash flow as dividends last year, which is conservatively low.
View our latest analysis for Satia Industries
Click here to see how much of its profit Satia Industries paid out over the last 12 months.
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. Satia Industries reported a loss last year, and the general trend suggests its earnings have also been declining in recent years, making us wonder if the dividend is at risk.
The main way most investors will assess a company's dividend prospects is by checking the historical rate of dividend growth. Satia Industries has delivered an average of 8.0% per year annual increase in its dividend, based on the past nine years of dividend payments.
Get our latest analysis on Satia Industries's balance sheet health here.
Final Takeaway
Is Satia Industries worth buying for its dividend? We're a bit uncomfortable with it paying a dividend while being loss-making. However, we note that the dividend was covered by cash flow. Overall, it's not a bad combination, but we feel that there are likely more attractive dividend prospects out there.
In light of that, while Satia Industries has an appealing dividend, it's worth knowing the risks involved with this stock. For instance, we've identified 3 warning signs for Satia Industries (1 is a bit concerning) you should be aware of.
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.