Three Days Left Until Jay Bharat Maruti Limited (NSE:JAYBARMARU) Trades Ex-Dividend

Jay Bharat Maruti Limited (NSE:JAYBARMARU) is about to trade ex-dividend in the next three days. Investors can purchase shares before the 1st of September in order to be eligible for this dividend, which will be paid on the 10th of October.

Jay Bharat Maruti's next dividend payment will be ₹1.25 per share, and in the last 12 months, the company paid a total of ₹1.25 per share. Based on the last year's worth of payments, Jay Bharat Maruti stock has a trailing yield of around 0.6% on the current share price of ₹223.25. Dividends are a major contributor to investment returns for long term holders, but only if the dividend continues to be paid. That's why we should always check whether the dividend payments appear sustainable, and if the company is growing.

See our latest analysis for Jay Bharat Maruti

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. Jay Bharat Maruti has a low and conservative payout ratio of just 9.6% of its income after tax. A useful secondary check can be to evaluate whether Jay Bharat Maruti generated enough free cash flow to afford its dividend. It distributed 36% of its free cash flow as dividends, a comfortable payout level for most companies.

It's positive to see that Jay Bharat Maruti's dividend is covered by both profits and cash flow, since this is generally a sign that the dividend is sustainable, and a lower payout ratio usually suggests a greater margin of safety before the dividend gets cut.

Click here to see how much of its profit Jay Bharat Maruti paid out over the last 12 months.

Have Earnings And Dividends Been Growing?

Businesses with shrinking earnings are tricky from a dividend perspective. Investors love dividends, so if earnings fall and the dividend is reduced, expect a stock to be sold off heavily at the same time. Readers will understand then, why we're concerned to see Jay Bharat Maruti's earnings per share have dropped 6.7% a year over the past five years. Ultimately, when earnings per share decline, the size of the pie from which dividends can be paid, shrinks.

Many investors will assess a company's dividend performance by evaluating how much the dividend payments have changed over time. Jay Bharat Maruti has seen its dividend decline 1.8% per annum on average over the past 10 years, which is not great to see.

To Sum It Up

Should investors buy Jay Bharat Maruti for the upcoming dividend? Jay Bharat Maruti has comfortably low cash and profit payout ratios, which may mean the dividend is sustainable even in the face of a sharp decline in earnings per share. Still, we consider declining earnings to be a warning sign. All things considered, we are not particularly enthused about Jay Bharat Maruti from a dividend perspective.

On that note, you'll want to research what risks Jay Bharat Maruti is facing. For example, Jay Bharat Maruti has 4 warning signs (and 1 which makes us a bit uncomfortable) we think you should know about.

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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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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