Only Three Days Left To Cash In On Balmer Lawrie's (NSE:BALMLAWRIE) Dividend

Regular readers will know that we love our dividends at Simply Wall St, which is why it's exciting to see Balmer Lawrie & Co. Ltd. (NSE:BALMLAWRIE) is about to trade ex-dividend in the next three days. 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. 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. In other words, investors can purchase Balmer Lawrie's shares before the 19th of September in order to be eligible for the dividend, which will be paid on the 26th of October.

The company's next dividend payment will be ₹8.50 per share. Last year, in total, the company distributed ₹8.50 to shareholders. Calculating the last year's worth of payments shows that Balmer Lawrie has a trailing yield of 3.0% on the current share price of ₹281.85. If you buy this business for its dividend, you should have an idea of whether Balmer Lawrie's dividend is reliable and sustainable. So we need to investigate whether Balmer Lawrie can afford its dividend, and if the dividend could grow.

View our latest analysis for Balmer Lawrie

Dividends are usually paid out of company profits, so if a company pays out more than it earned then its dividend is usually at greater risk of being cut. Balmer Lawrie paid out 56% of its earnings to investors last year, a normal payout level for most businesses. A useful secondary check can be to evaluate whether Balmer Lawrie generated enough free cash flow to afford its dividend. Over the last year it paid out 58% of its free cash flow as dividends, within the usual range 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 Balmer Lawrie paid out over the last 12 months.

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. This is why it's a relief to see Balmer Lawrie earnings per share are up 6.1% per annum over the last five years. While earnings have been growing at a credible rate, the company is paying out a majority of its earnings to shareholders. If management lifts the payout ratio further, we'd take this as a tacit signal that the company's growth prospects are slowing.

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, Balmer Lawrie has increased its dividend at approximately 11% a year on average. We're glad to see dividends rising alongside earnings over a number of years, which may be a sign the company intends to share the growth with shareholders.

Final Takeaway

Should investors buy Balmer Lawrie for the upcoming dividend? Earnings per share growth has been unremarkable, and while the company is paying out a majority of its earnings and cash flow in the form of dividends, the dividend payments don't appear excessive. To summarise, Balmer Lawrie looks okay on this analysis, although it doesn't appear a stand-out opportunity.

However if you're still interested in Balmer Lawrie as a potential investment, you should definitely consider some of the risks involved with Balmer Lawrie. To help with this, we've discovered 1 warning sign for Balmer Lawrie that you should be aware of before investing in their shares.

A common investing mistake is buying the first interesting stock you see. Here you can find a full list of high-yield dividend stocks.

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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.