InfoBeans Technologies Limited (NSE:INFOBEAN) Looks Interesting, And It's About To Pay A Dividend
InfoBeans Technologies Limited (NSE:INFOBEAN) stock is about to trade ex-dividend in 3 days time. If you purchase the stock on or after the 6th of August, you won't be eligible to receive this dividend, when it is paid on the 13th of September.
InfoBeans Technologies's next dividend payment will be ₹1.00 per share, and in the last 12 months, the company paid a total of ₹1.00 per share. Calculating the last year's worth of payments shows that InfoBeans Technologies has a trailing yield of 1.7% on the current share price of ₹59.1. Dividends are a major contributor to investment returns for long term holders, but only if the dividend continues to be paid. As a result, readers should always check whether InfoBeans Technologies has been able to grow its dividends, or if the dividend might be cut.
See our latest analysis for InfoBeans Technologies
If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. InfoBeans Technologies paid out just 14% of its profit last year, which we think is conservatively low and leaves plenty of margin for unexpected circumstances. That said, even highly profitable companies sometimes might not generate enough cash to pay the dividend, which is why we should always check if the dividend is covered by cash flow. The good news is it paid out just 8.1% of its free cash flow in the last year.
It's encouraging to see that the dividend is covered by both profit and cash flow. This generally suggests the dividend is sustainable, as long as earnings don't drop precipitously.
Click here to see how much of its profit InfoBeans Technologies paid out over the last 12 months.
Have Earnings And Dividends Been Growing?
Stocks in companies that generate sustainable earnings growth often make the best dividend prospects, as it is easier to lift the dividend when earnings are rising. If earnings fall far enough, the company could be forced to cut its dividend. Fortunately for readers, InfoBeans Technologies's earnings per share have been growing at 12% a year for the past five years. The company has managed to grow earnings at a rapid rate, while reinvesting most of the profits 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.
This is InfoBeans Technologies's first year of paying a dividend, so it doesn't have much of a history yet to compare to.
Final Takeaway
Is InfoBeans Technologies an attractive dividend stock, or better left on the shelf? InfoBeans Technologies has been growing earnings at a rapid rate, and has a conservatively low payout ratio, implying that it is reinvesting heavily in its business; a sterling combination. It's a promising combination that should mark this company worthy of closer attention.
Curious about whether InfoBeans Technologies has been able to consistently generate growth? Here's a chart of its historical 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.
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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.
