Only Three Days Left To Cash In On Maruti Suzuki India's (NSE:MARUTI) Dividend

Maruti Suzuki India Limited (NSE:MARUTI) is about to trade ex-dividend in the next 3 days. The ex-dividend date is usually set to be one business day before the record date which is the cut-off date on which you must be present on the company's books as a shareholder in order to receive the dividend. The ex-dividend date is an important date to be aware of as any purchase of the stock made on or after this date might mean a late settlement that doesn't show on the record date. Thus, you can purchase Maruti Suzuki India's shares before the 5th of August in order to receive the dividend, which the company will pay on the 2nd of September.

The company's next dividend payment will be ₹45.00 per share. Last year, in total, the company distributed ₹45.00 to shareholders. Calculating the last year's worth of payments shows that Maruti Suzuki India has a trailing yield of 0.6% on the current share price of ₹6977.7. We love seeing companies pay a dividend, but it's also important to be sure that laying the golden eggs isn't going to kill our golden goose! We need to see whether the dividend is covered by earnings and if it's growing.

View our latest analysis for Maruti Suzuki India

If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. Maruti Suzuki India paid out a comfortable 27% of its profit last year. Yet cash flows are even more important than profits for assessing a dividend, so we need to see if the company generated enough cash to pay its distribution. It distributed 28% of its free cash flow as dividends, a comfortable payout level for most companies.

It's positive to see that Maruti Suzuki India'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 Maruti Suzuki India paid out over the last 12 months.

Have Earnings And Dividends Been Growing?

Companies that aren't growing their earnings can still be valuable, but it is even more important to assess the sustainability of the dividend if it looks like the company will struggle to grow. If business enters a downturn and the dividend is cut, the company could see its value fall precipitously. It's not encouraging to see that Maruti Suzuki India's earnings are effectively flat over the past five years. We'd take that over an earnings decline any day, but in the long run, the best dividend stocks all grow their earnings per share.

Many investors will assess a company's dividend performance by evaluating how much the dividend payments have changed over time. In the past 10 years, Maruti Suzuki India has increased its dividend at approximately 20% a year on average.

Final Takeaway

Is Maruti Suzuki India an attractive dividend stock, or better left on the shelf? While it's not great to see that earnings per share are effectively flat over the 10-year period we checked, at least the payout ratios are low and conservative. To summarise, Maruti Suzuki India looks okay on this analysis, although it doesn't appear a stand-out opportunity.

On that note, you'll want to research what risks Maruti Suzuki India is facing. To help with this, we've discovered 1 warning sign for Maruti Suzuki India that you should be aware of before investing in their shares.

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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