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Should You Buy Touchwood Entertainment Limited (NSE:TOUCHWOOD) For Its Upcoming Dividend In 3 Days?

Simply Wall St

Touchwood Entertainment Limited (NSE:TOUCHWOOD) stock is about to trade ex-dividend in 3 days time. You can purchase shares before the 14th of November in order to receive the dividend, which the company will pay on the 1st of December.

Touchwood Entertainment's next dividend payment will be ₹0.2 per share. Last year, in total, the company distributed ₹0.8 to shareholders. Based on the last year's worth of payments, Touchwood Entertainment stock has a trailing yield of around 1.2% on the current share price of ₹65.2. If you buy this business for its dividend, you should have an idea of whether Touchwood Entertainment'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.

Check out our latest analysis for Touchwood Entertainment

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. That's why it's good to see Touchwood Entertainment paying out a modest 26% of its earnings.

Click here to see how much of its profit Touchwood Entertainment paid out over the last 12 months.

NSEI:TOUCHWOOD Historical Dividend Yield, November 10th 2019

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 earnings decline and the company is forced to cut its dividend, investors could watch the value of their investment go up in smoke. That's why it's comforting to see Touchwood Entertainment's earnings have been skyrocketing, up 62% per annum for the past five years.

This is Touchwood Entertainment's first year of paying a dividend, so it doesn't have much of a history yet to compare to.

To Sum It Up

Is Touchwood Entertainment worth buying for its dividend? When companies are growing rapidly and retaining a majority of the profits within the business, it's usually a sign that reinvesting earnings creates more value than paying dividends to shareholders. This is one of the most attractive investment combinations under this analysis, as it can create substantial value for investors over the long run. In summary, Touchwood Entertainment appears to have some promise as a dividend stock, and we'd suggest taking a closer look at it.

Want to learn more about Touchwood Entertainment? Here's a visualisation of its historical rate of revenue and earnings growth.

A common investment mistake is buying the first interesting stock you see. Here you can find a list of promising dividend stocks with a greater than 2% yield and an upcoming dividend.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.