Sundaram Brake Linings Limited (NSE:SUNDRMBRAK) Passed Our Checks, And It's About To Pay A ₹2.00 Dividend

It looks like Sundaram Brake Linings Limited (NSE:SUNDRMBRAK) is about to go ex-dividend in the next day or two. Typically, the ex-dividend date is one business day before the record date which is the date on which a company determines the shareholders eligible to receive a dividend. It is important to be aware of the ex-dividend date because any trade on the stock needs to have been settled on or before the record date. Meaning, you will need to purchase Sundaram Brake Linings' shares before the 16th of July to receive the dividend, which will be paid on the 23rd of August.

The upcoming dividend for Sundaram Brake Linings will put a total of ₹2.00 per share in shareholders' pockets. 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.

View our latest analysis for Sundaram Brake Linings

Dividends are typically paid from company earnings. If a company pays more in dividends than it earned in profit, then the dividend could be unsustainable. Sundaram Brake Linings has a low and conservative payout ratio of just 7.8% of its income after tax.

Click here to see how much of its profit Sundaram Brake Linings 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. Investors love dividends, so if earnings fall and the dividend is reduced, expect a stock to be sold off heavily at the same time. With that in mind, we're encouraged by the steady growth at Sundaram Brake Linings, with earnings per share up 7.4% on average over the last five years. Earnings per share have been increasing steadily and management is reinvesting almost all of the profits back into the business. If profits are reinvested effectively, this could be a bullish combination for future earnings and dividends.

This is Sundaram Brake Linings's first year of paying a regular dividend, so it doesn't have much of a history yet to compare to.

To Sum It Up

Has Sundaram Brake Linings got what it takes to maintain its dividend payments? It has been growing its earnings per share somewhat in recent years, although it reinvests more than half its earnings in the business, which could suggest there are some growth projects that have not yet reached fruition. We think this is a pretty attractive combination, and would be interested in investigating Sundaram Brake Linings more closely.

On that note, you'll want to research what risks Sundaram Brake Linings is facing. For instance, we've identified 4 warning signs for Sundaram Brake Linings (1 doesn't sit too well with us) you should be aware of.

Generally, we wouldn't recommend just buying the first dividend stock you see. Here's a curated list of interesting stocks that are strong dividend payers.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com