Want to participate in a short research study? Help shape the future of investing tools and you could win a $250 gift card!
L&T Technology Services Limited (NSE:LTTS) stock is about to trade ex-dividend in 1 days time. You can purchase shares before the 11th of July in order to receive the dividend, which the company will pay on the 19th of August.
L&T Technology Services’s next dividend payment will be ₹13.50 per share. Last year, in total, the company distributed ₹21.00 to shareholders. Looking at the last 12 months of distributions, L&T Technology Services has a trailing yield of approximately 1.3% on its current stock price of ₹1640.35. Dividends are an important source of income to many shareholders, but the health of the business is crucial to maintaining those dividends. So we need to check whether the dividend payments are covered, and if earnings are growing.
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. Fortunately L&T Technology Services’s payout ratio is modest, at just 28% of profit. 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. Fortunately, it paid out only 28% of its free cash flow in the past year.
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.
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. That’s why it’s comforting to see L&T Technology Services’s earnings have been skyrocketing, up 145% per annum for the past five years.
Earnings per share have been growing very quickly, and the company is paying out a relatively low percentage of its profit and cash flow. This is a very favourable combination that can often lead to the dividend multiplying over the long term, if earnings grow and the company pays out a higher percentage of its earnings.
Many investors will assess a company’s dividend performance by evaluating how much the dividend payments have changed over time. Since the start of our data, 3 years ago, L&T Technology Services has lifted its dividend by approximately 52% a year on average. It’s great to see earnings per share growing rapidly over several years, and dividends per share growing right along with it.
Is L&T Technology Services worth buying for its dividend? L&T Technology Services has grown its earnings per share while simultaneously reinvesting in the business. Unfortunately it’s cut the dividend at least once in the past three years, but the conservative payout ratio makes the current dividend look sustainable. There’s a lot to like about L&T Technology Services, and we would prioritise taking a closer look at it.
Wondering what the future holds for L&T Technology Services? See what the 13 analysts we track are forecasting, with this visualisation of its historical and future estimated earnings and cash flow
We wouldn’t recommend just buying the first dividend stock you see, though. Here’s a list of interesting dividend stocks with a greater than 2% yield and an upcoming dividend.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at email@example.com. 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. Simply Wall St has no position in the stocks mentioned. Thank you for reading.