Interested In Mold-Tek Technologies' (NSE:MOLDTECH) Upcoming ₹0.60 Dividend? You Have Three Days Left

Readers hoping to buy Mold-Tek Technologies Limited (NSE:MOLDTECH) for its dividend will need to make their move shortly, as the stock is about to trade ex-dividend. This means that investors who purchase shares on or after the 16th of March will not receive the dividend, which will be paid on the 7th of April.

Mold-Tek Technologies's next dividend payment will be ₹0.60 per share. Last year, in total, the company distributed ₹0.60 to shareholders. Based on the last year's worth of payments, Mold-Tek Technologies has a trailing yield of 1.3% on the current stock price of ₹44.25. 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! That's why we should always check whether the dividend payments appear sustainable, and if the company is growing.

Check out our latest analysis for Mold-Tek Technologies

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. Mold-Tek Technologies paid out just 22% of its profit last year, which we think is conservatively low and leaves plenty of margin for unexpected circumstances. 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. Dividends consumed 61% of the company's free cash flow last year, which is within a normal range for most dividend-paying organisations.

It's positive to see that Mold-Tek Technologies'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 Mold-Tek Technologies 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. That explains why we're not overly excited about Mold-Tek Technologies's flat earnings 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. Earnings per share growth has been slim, and the company is already paying out a majority of its earnings. While there is some room to both increase the payout ratio and reinvest in the business, generally the higher a payout ratio goes, the lower a company's prospects for future growth.

The main way most investors will assess a company's dividend prospects is by checking the historical rate of dividend growth. In the past 10 years, Mold-Tek Technologies has increased its dividend at approximately 7.2% a year on average.

The Bottom Line

From a dividend perspective, should investors buy or avoid Mold-Tek Technologies? Earnings per share have been flat over the 10-year timeframe we consider, and Mold-Tek Technologies paid out less than half its earnings and more than half its free cashflow over the last year. In summary, while it has some positive characteristics, we're not inclined to race out and buy Mold-Tek Technologies today.

With that in mind, a critical part of thorough stock research is being aware of any risks that stock currently faces. For example, we've found 4 warning signs for Mold-Tek Technologies that we recommend you consider before investing in the business.

If you're in the market for dividend stocks, we recommend checking our list of top 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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