Some investors rely on dividends for growing their wealth, and if you're one of those dividend sleuths, you might be intrigued to know that Jain Irrigation Systems Limited (NSE:JISLDVREQS) is about to go ex-dividend in just 4 days. 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 30th of October.
Jain Irrigation Systems'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. Based on the last year's worth of payments, Jain Irrigation Systems stock has a trailing yield of around 5.2% on the current share price of ₹14.85. If you buy this business for its dividend, you should have an idea of whether Jain Irrigation Systems's dividend is reliable and sustainable. So we need to investigate whether Jain Irrigation Systems can afford its dividend, and if the dividend could grow.
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. That's why it's good to see Jain Irrigation Systems paying out a modest 29% of its earnings.
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. Investors love dividends, so if earnings fall and the dividend is reduced, expect a stock to be sold off heavily at the same time. That's why it's comforting to see Jain Irrigation Systems's earnings have been skyrocketing, up 31% per annum for the past five years. Earnings per share have been growing very quickly, and the company is paying out a relatively low percentage of its profit and cash flow. This is a very favourable combination that can often lead to the dividend multiplying over the long term, if earnings grow and the company pays out a higher percentage of its earnings.
Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. Jain Irrigation Systems has delivered an average of 8.6% per year annual increase in its dividend, based on the past 10 years of dividend payments. We're glad to see dividends rising alongside earnings over a number of years, which may be a sign the company intends to share the growth with shareholders.
To Sum It Up
Should investors buy Jain Irrigation Systems for the upcoming dividend? Jain Irrigation Systems has grown its earnings per share while simultaneously reinvesting in the business. Unfortunately it's cut the dividend at least once in the past ten years, but the conservative payout ratio makes the current dividend look sustainable. There's a lot to like about Jain Irrigation Systems, and we would prioritise taking a closer look at it.
Curious what other investors think of Jain Irrigation Systems? See what analysts 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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