Advani Hotels & Resorts (India) Limited (NSE:ADVANIHOTR) Is About To Go Ex-Dividend, And It Pays A 2.9% Yield

Readers hoping to buy Advani Hotels & Resorts (India) Limited (NSE:ADVANIHOTR) for its dividend will need to make their move shortly, as the stock is about to trade ex-dividend. The ex-dividend date occurs one day before the record date which is the day on which shareholders need to be on the company's books in order 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 Advani Hotels & Resorts (India)'s shares before the 14th of February in order to be eligible for the dividend, which will be paid on the 6th of March.

The company's next dividend payment will be ₹1.00 per share, and in the last 12 months, the company paid a total of ₹1.80 per share. Looking at the last 12 months of distributions, Advani Hotels & Resorts (India) has a trailing yield of approximately 2.9% on its current stock price of ₹63.37. Dividends are a major contributor to investment returns for long term holders, but only if the dividend continues to be paid. As a result, readers should always check whether Advani Hotels & Resorts (India) has been able to grow its dividends, or if the dividend might be cut.

See our latest analysis for Advani Hotels & Resorts (India)

Dividends are typically paid out of company income, so if a company pays out more than it earned, its dividend is usually at a higher risk of being cut. Advani Hotels & Resorts (India) paid out more than half (65%) of its earnings last year, which is a regular payout ratio for most companies. Yet cash flow is typically more important than profit for assessing dividend sustainability, so we should always check if the company generated enough cash to afford its dividend. It paid out 76% of its free cash flow as dividends, which is within usual limits but will limit the company's ability to lift the dividend if there's no growth.

It's positive to see that Advani Hotels & Resorts (India)'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 Advani Hotels & Resorts (India) paid out over the last 12 months.

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 business enters a downturn and the dividend is cut, the company could see its value fall precipitously. For this reason, we're glad to see Advani Hotels & Resorts (India)'s earnings per share have risen 18% per annum over the last five years. The company paid out most of its earnings as dividends over the last year, even though business is booming and earnings per share are growing rapidly. Higher earnings generally bode well for growing dividends, although with seemingly strong growth prospects we'd wonder why management are not reinvesting more in the business.

Many investors will assess a company's dividend performance by evaluating how much the dividend payments have changed over time. Advani Hotels & Resorts (India) has delivered 31% dividend growth per year on average over the past 10 years. Both per-share earnings and dividends have both been growing rapidly in recent times, which is great to see.

To Sum It Up

Is Advani Hotels & Resorts (India) worth buying for its dividend? It's good to see earnings are growing, since all of the best dividend stocks grow their earnings meaningfully over the long run. That's why we're glad to see Advani Hotels & Resorts (India)'s earnings per share growing, although as we saw, the company is paying out more than half of its earnings and cashflow - 65% and 76% respectively. Overall, it's not a bad combination, but we feel that there are likely more attractive dividend prospects out there.

On that note, you'll want to research what risks Advani Hotels & Resorts (India) is facing. In terms of investment risks, we've identified 2 warning signs with Advani Hotels & Resorts (India) and understanding them should be part of your investment process.

Generally, we wouldn't recommend just buying the first dividend stock you see. Here's a curated list of interesting stocks that are strong dividend payers.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.