Salasar Techno Engineering Limited (NSE:SALASAR) Looks Like A Good Stock, And It's Going Ex-Dividend Soon

It looks like Salasar Techno Engineering Limited (NSE:SALASAR) is about to go ex-dividend in the next three days. You can purchase shares before the 17th of September in order to receive the dividend, which the company will pay on the 26th of October.

Salasar Techno Engineering's upcoming dividend is ₹1.00 a share, following on from the last 12 months, when the company distributed a total of ₹2.00 per share to shareholders. Looking at the last 12 months of distributions, Salasar Techno Engineering has a trailing yield of approximately 1.2% on its current stock price of ₹173.45. Dividends are an important source of income to many shareholders, but the health of the business is crucial to maintaining those dividends. So we need to investigate whether Salasar Techno Engineering can afford its dividend, and if the dividend could grow.

View our latest analysis for Salasar Techno Engineering

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. Salasar Techno Engineering paid out just 17% of its profit last year, which we think is conservatively low and leaves plenty of margin for unexpected circumstances. A useful secondary check can be to evaluate whether Salasar Techno Engineering generated enough free cash flow to afford its dividend. It distributed 28% of its free cash flow as dividends, a comfortable payout level for most companies.

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 Salasar Techno Engineering paid out over the last 12 months.

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. If earnings fall far enough, the company could be forced to cut its dividend. Fortunately for readers, Salasar Techno Engineering's earnings per share have been growing at 13% a year for the past five years. Earnings per share have been growing rapidly and the company is retaining a majority of its earnings within the business. This will make it easier to fund future growth efforts and we think this is an attractive combination - plus the dividend can always be increased later.

Many investors will assess a company's dividend performance by evaluating how much the dividend payments have changed over time. Salasar Techno Engineering's dividend payments are broadly unchanged compared to where they were three years ago.

To Sum It Up

Should investors buy Salasar Techno Engineering for the upcoming dividend? It's great that Salasar Techno Engineering is growing earnings per share while simultaneously paying out a low percentage of both its earnings and cash flow. It's disappointing to see the dividend has been cut at least once in the past, but as things stand now, the low payout ratio suggests a conservative approach to dividends, which we like. It's a promising combination that should mark this company worthy of closer attention.

With that in mind, a critical part of thorough stock research is being aware of any risks that stock currently faces. Be aware that Salasar Techno Engineering is showing 4 warning signs in our investment analysis, and 1 of those is significant...

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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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. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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