Be Sure To Check Out Sagility Limited (NSE:SAGILITY) Before It Goes Ex-Dividend
Sagility Limited (NSE:SAGILITY) is about to trade 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 an important date to be aware of as any purchase of the stock made on or after this date might mean a late settlement that doesn't show on the record date. This means that investors who purchase Sagility's shares on or after the 30th of October will not receive the dividend, which will be paid on the 21st of November.
The company's next dividend payment will be ₹0.15 per share. Last year, in total, the company distributed ₹0.20 to shareholders. Calculating the last year's worth of payments shows that Sagility has a trailing yield of 0.7% on the current share price of ₹44.18. 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 check whether the dividend payments are covered, and if earnings are growing.
Dividends are typically paid out of company income, so if a company pays out more than it earned, its dividend is usually at a higher risk of being cut. Sagility is paying out just 11% of its profit after tax, which is comfortably low and leaves plenty of breathing room in the case of adverse events. 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 6.7% of its free cash flow in the last year.
It's positive to see that Sagility'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.
See our latest analysis for Sagility
Click here to see the company's payout ratio, plus analyst estimates of its future dividends.
Have Earnings And Dividends Been Growing?
Companies with consistently growing earnings per share generally make the best dividend stocks, as they usually find it easier to grow dividends per share. If earnings fall far enough, the company could be forced to cut its dividend. That's why it's comforting to see Sagility's earnings have been skyrocketing, up 47% per annum for the past five years. With earnings per share growing rapidly and the company sensibly reinvesting almost all of its profits within the business, Sagility looks like a promising growth company.
Unfortunately Sagility has only been paying a dividend for a year or so, so there's not much of a history to draw insight from.
To Sum It Up
Has Sagility got what it takes to maintain its dividend payments? We love that Sagility is growing earnings per share while simultaneously paying out a low percentage of both its earnings and cash flow. These characteristics suggest the company is reinvesting in growing its business, while the conservative payout ratio also implies a reduced risk of the dividend being cut in the future. Sagility looks solid on this analysis overall, and we'd definitely consider investigating it more closely.
Ever wonder what the future holds for Sagility? See what the 13 analysts we track are forecasting, with this visualisation of its historical and future estimated earnings and cash flow
If you're in the market for strong dividend payers, we recommend checking our selection of top dividend stocks.
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