Maheshwari Logistics Limited (NSE:MAHESHWARI) is about to trade ex-dividend in the next 3 days. You will need to purchase shares before the 5th of September to receive the dividend, which will be paid on the 1st of January.
Maheshwari Logistics's next dividend payment will be ₹1.20 per share, and in the last 12 months, the company paid a total of ₹1.20 per share. Based on the last year's worth of payments, Maheshwari Logistics stock has a trailing yield of around 0.5% on the current share price of ₹252.9. Dividends are a major contributor to investment returns for long term holders, but only if the dividend continues to be paid. So we need to check whether the dividend payments are covered, and if earnings are growing.
If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. Maheshwari Logistics is paying out just 11% of its profit after tax, which is comfortably low and leaves plenty of breathing room in the case of adverse events. Maheshwari Logistics paid a dividend despite reporting negative free cash flow over the last twelve months. This may be due to heavy investment in the business, but this is still suboptimal from a dividend sustainability perspective.
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 decline and the company is forced to cut its dividend, investors could watch the value of their investment go up in smoke. Fortunately for readers, Maheshwari Logistics's earnings per share have been growing at 16% a year for the past five years.
Given that Maheshwari Logistics has only been paying a dividend for a year, there's not much of a past history to draw insight from.
The Bottom Line
From a dividend perspective, should investors buy or avoid Maheshwari Logistics? Maheshwari Logistics 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. There's a lot to like about Maheshwari Logistics, and we would prioritise taking a closer look at it.
Want to learn more about Maheshwari Logistics's dividend performance? Check out this visualisation of its historical revenue and earnings growth.
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