Here's What We Like About Career Point's (NSE:CAREERP) Upcoming Dividend

Readers hoping to buy Career Point Limited (NSE:CAREERP) for its dividend will need to make their move shortly, as the stock is about to trade ex-dividend. Ex-dividend means that investors that purchase the stock on or after the 25th of February will not receive this dividend, which will be paid on the 11th of March.

Career Point's upcoming dividend is ₹1.00 a share, following on from the last 12 months, when the company distributed a total of ₹3.00 per share to shareholders. Looking at the last 12 months of distributions, Career Point has a trailing yield of approximately 1.9% on its current stock price of ₹157.55. If you buy this business for its dividend, you should have an idea of whether Career Point's dividend is reliable and sustainable. As a result, readers should always check whether Career Point has been able to grow its dividends, or if the dividend might be cut.

View our latest analysis for Career Point

If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. Career Point is paying out just 6.5% of its profit after tax, which is comfortably low and leaves plenty of breathing room in the case of adverse events. 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. The good news is it paid out just 22% of its free cash flow in the last 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.

Click here to see how much of its profit Career Point 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. If earnings fall far enough, the company could be forced to cut its dividend. That's why it's comforting to see Career Point's earnings have been skyrocketing, up 37% per annum for the past five years. Career Point earnings per share have been sprinting ahead like the Road Runner at a track and field day; scarcely stopping even for a cheeky "beep-beep". We also like that it is reinvesting most of its profits in its business.'

Many investors will assess a company's dividend performance by evaluating how much the dividend payments have changed over time. In the last seven years, Career Point has lifted its dividend by approximately 6.0% a year on average. It's good to see both earnings and the dividend have improved - although the former has been rising much quicker than the latter, possibly due to the company reinvesting more of its profits in growth.

To Sum It Up

Has Career Point got what it takes to maintain its dividend payments? It's great that Career Point is growing earnings per share while simultaneously paying out a low percentage of both its earnings and cash flow. It's disappointing to see the dividend has been cut at least once in the past, but as things stand now, the low payout ratio suggests a conservative approach to dividends, which we like. It's a promising combination that should mark this company worthy of closer attention.

On that note, you'll want to research what risks Career Point is facing. For example, we've found 3 warning signs for Career Point 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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