Stock Analysis

Central Bank of India (NSE:CENTRALBK) Looks Like A Good Stock, And It's Going Ex-Dividend Soon

NSEI:CENTRALBK
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Readers hoping to buy Central Bank of India (NSE:CENTRALBK) for its dividend will need to make their move shortly, as the stock is about to trade ex-dividend. The ex-dividend date is usually set to be two business days 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 of consequence because whenever a stock is bought or sold, the trade can take two business days or more to settle. Thus, you can purchase Central Bank of India's shares before the 4th of July in order to receive the dividend, which the company will pay on the 18th of August.

The company's upcoming dividend is ₹1.875 a share, following on from the last 12 months, when the company distributed a total of ₹0.19 per share to shareholders. Last year's total dividend payments show that Central Bank of India has a trailing yield of 0.5% on the current share price of ₹39.66. If you buy this business for its dividend, you should have an idea of whether Central Bank of India's dividend is reliable and sustainable. 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. Central Bank of India paid out just 4.1% of its profit last year, which we think is conservatively low and leaves plenty of margin for unexpected circumstances.

Companies that pay out less in dividends than they earn in profits generally have more sustainable dividends. The lower the payout ratio, the more wiggle room the business has before it could be forced to cut the dividend.

View our latest analysis for Central Bank of India

Click here to see how much of its profit Central Bank of India paid out over the last 12 months.

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NSEI:CENTRALBK Historic Dividend July 1st 2025
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Have Earnings And Dividends Been Growing?

Businesses with strong growth prospects usually make the best dividend payers, because it's easier to grow dividends when earnings per share are improving. Investors love dividends, so if earnings fall and the dividend is reduced, expect a stock to be sold off heavily at the same time. It's encouraging to see Central Bank of India has grown its earnings rapidly, up 65% a year for the past five years.

The main way most investors will assess a company's dividend prospects is by checking the historical rate of dividend growth. Central Bank of India has seen its dividend decline 9.3% per annum on average over the past 10 years, which is not great to see. It's unusual to see earnings per share increasing at the same time as dividends per share have been in decline. We'd hope it's because the company is reinvesting heavily in its business, but it could also suggest business is lumpy.

Final Takeaway

Is Central Bank of India an attractive dividend stock, or better left on the shelf? Typically, companies that are growing rapidly and paying out a low fraction of earnings are keeping the profits for reinvestment in the business. This is one of the most attractive investment combinations under this analysis, as it can create substantial value for investors over the long run. Central Bank of India ticks a lot of boxes for us from a dividend perspective, and we think these characteristics should mark the company as deserving of further attention.

While it's tempting to invest in Central Bank of India for the dividends alone, you should always be mindful of the risks involved. In terms of investment risks, we've identified 1 warning sign with Central Bank of India and understanding them should be part of your investment process.

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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.