It looks like INOX Leisure Limited (NSE:INOXLEISUR) is about to go ex-dividend in the next 3 days. Investors can purchase shares before the 4th of November in order to be eligible for this dividend, which will be paid on the 22nd of November.
INOX Leisure's next dividend payment will be ₹1.0 per share, and in the last 12 months, the company paid a total of ₹2.0 per share. Looking at the last 12 months of distributions, INOX Leisure has a trailing yield of approximately 0.6% on its current stock price of ₹361.45. 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 INOX Leisure has been able to grow its dividends, or if the dividend might be cut.
If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation.
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. It's encouraging to see INOX Leisure has grown its earnings rapidly, up 25% a year for the past five years. INOX Leisure is paying out less than half its earnings and cash flow, while simultaneously growing earnings per share at a rapid clip. Companies with growing earnings and low payout ratios are often the best long-term dividend stocks, as the company can both grow its earnings and increase the percentage of earnings that it pays out, essentially multiplying the dividend.
This is INOX Leisure's first year of paying a dividend, so it doesn't have much of a history yet to compare to.
From a dividend perspective, should investors buy or avoid INOX Leisure? Typically, companies that are growing rapidly and paying out a low fraction of earnings are keeping the profits for reinvestment in the business. This is one of the most attractive investment combinations under this analysis, as it can create substantial value for investors over the long run. Overall, INOX Leisure looks like a promising dividend stock in this analysis, and we think it would be worth investigating further.
Ever wonder what the future holds for INOX Leisure? See what the nine analysts we track are forecasting, with this visualisation of its historical and future estimated earnings and cash flow
We wouldn't recommend just buying the first dividend stock you see, though. Here's a list of interesting dividend stocks with a greater than 2% yield and an upcoming dividend.
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