Shree Pushkar Chemicals & Fertilisers Limited (NSE:SHREEPUSHK) stock is about to trade ex-dividend in 2 days time. This means that investors who purchase shares on or after the 12th of September will not receive the dividend, which will be paid on the 23rd of October.
Shree Pushkar Chemicals & Fertilisers's next dividend payment will be ₹1.50 per share, on the back of last year when the company paid a total of ₹1.50 to shareholders. Based on the last year's worth of payments, Shree Pushkar Chemicals & Fertilisers has a trailing yield of 1.7% on the current stock price of ₹89.05. If you buy this business for its dividend, you should have an idea of whether Shree Pushkar Chemicals & Fertilisers's dividend is reliable and sustainable. That's why we should always check whether the dividend payments appear sustainable, and if the company is growing.
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. Shree Pushkar Chemicals & Fertilisers paid out just 12% of its profit last year, which we think is conservatively low and leaves plenty of margin for unexpected circumstances.
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. If business enters a downturn and the dividend is cut, the company could see its value fall precipitously. Fortunately for readers, Shree Pushkar Chemicals & Fertilisers's earnings per share have been growing at 20% a year for the past five years. Earnings per share have been growing rapidly and the company is retaining a majority of its earnings within the business. Fast-growing businesses that are reinvesting heavily are enticing from a dividend perspective, especially since they can often increase the payout ratio later.
Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. Shree Pushkar Chemicals & Fertilisers has delivered 11% dividend growth per year on average over the past 4 years. It's exciting to see that both earnings and dividends per share have grown rapidly over the past few years.
The Bottom Line
From a dividend perspective, should investors buy or avoid Shree Pushkar Chemicals & Fertilisers? Shree Pushkar Chemicals & Fertilisers has grown its earnings per share while simultaneously reinvesting in the business. Unfortunately it's cut the dividend at least once in the past four years, but the conservative payout ratio makes the current dividend look sustainable. It's a promising combination that should mark this company worthy of closer attention.
Want to learn more about Shree Pushkar Chemicals & Fertilisers's dividend performance? Check out this visualisation of its historical revenue and earnings growth.
If you're in the market for dividend stocks, we recommend checking our list of top dividend stocks with a greater than 2% yield and an upcoming dividend.
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