Is It Smart To Buy Mold-Tek Technologies Limited (NSE:MOLDTECH) Before It Goes Ex-Dividend?

By
Simply Wall St
Published
March 19, 2022
NSEI:MOLDTECH
Source: Shutterstock

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. 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. Therefore, if you purchase Mold-Tek Technologies' shares on or after the 23rd of March, you won't be eligible to receive the dividend, when it is paid on the 14th of April.

The company's upcoming dividend is ₹1.70 a share, following on from the last 12 months, when the company distributed a total of ₹1.70 per share to shareholders. Based on the last year's worth of payments, Mold-Tek Technologies has a trailing yield of 2.1% on the current stock price of ₹82.6. 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.

See 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 is paying out an acceptable 58% of its profit, a common payout level among most companies. That said, even highly profitable companies sometimes might not generate enough cash to pay the dividend, which is why we should always check if the dividend is covered by cash flow. It paid out 9.3% of its free cash flow as dividends last year, which is conservatively low.

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 Mold-Tek Technologies paid out over the last 12 months.

historic-dividend
NSEI:MOLDTECH Historic Dividend March 19th 2022

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. If earnings decline and the company is forced to cut its dividend, investors could watch the value of their investment go up in smoke. Fortunately for readers, Mold-Tek Technologies's earnings per share have been growing at 14% a year for the past five years. Mold-Tek Technologies is paying out a bit over half its earnings, which suggests the company is striking a balance between reinvesting in growth, and paying dividends. Given the quick rate of earnings per share growth and current level of payout, there may be a chance of further dividend increases in the future.

Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. Mold-Tek Technologies has delivered 19% dividend growth per year on average over the past 10 years. It's exciting to see that both earnings and dividends per share have grown rapidly over the past few years.

Final Takeaway

Is Mold-Tek Technologies an attractive dividend stock, or better left on the shelf? We like Mold-Tek Technologies's growing earnings per share and the fact that - while its payout ratio is around average - it paid out a lower percentage of its cash flow. Mold-Tek Technologies looks solid on this analysis overall, and we'd definitely consider investigating it more closely.

On that note, you'll want to research what risks Mold-Tek Technologies is facing. Case in point: We've spotted 2 warning signs for Mold-Tek Technologies you should be aware of.

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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