There's A Lot To Like About Infibeam Avenues' (NSE:INFIBEAM) Upcoming ₹0.05 Dividend

Infibeam Avenues Limited (NSE:INFIBEAM) is about to trade ex-dividend in the next 3 days. The ex-dividend date is one business day before a company's record date, which is the date on which the company determines which shareholders are entitled 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 Infibeam Avenues' shares before the 18th of September in order to be eligible for the dividend, which will be paid on the 25th of October.

The company's next dividend payment will be ₹0.05 per share, on the back of last year when the company paid a total of ₹0.05 to shareholders. Last year's total dividend payments show that Infibeam Avenues has a trailing yield of 0.3% on the current share price of ₹18. Dividends are a major contributor to investment returns for long term holders, but only if the dividend continues to be paid. We need to see whether the dividend is covered by earnings and if it's growing.

View our latest analysis for Infibeam Avenues

Dividends are usually paid out of company profits, so if a company pays out more than it earned then its dividend is usually at greater risk of being cut. Infibeam Avenues is paying out just 9.6% of its profit after tax, which is comfortably low and leaves plenty of breathing room in the case of adverse events.

Generally speaking, the lower a company's payout ratios, the more resilient its dividend usually is.

Click here to see how much of its profit Infibeam Avenues 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 business enters a downturn and the dividend is cut, the company could see its value fall precipitously. This is why it's a relief to see Infibeam Avenues earnings per share are up 9.8% per annum over the last five years.

The main way most investors will assess a company's dividend prospects is by checking the historical rate of dividend growth. It looks like the Infibeam Avenues dividends are largely the same as they were six years ago.

To Sum It Up

Should investors buy Infibeam Avenues for the upcoming dividend? Infibeam Avenues has seen its earnings per share grow slowly in recent years, and the company reinvests more than half of its profits in the business, which generally bodes well for its future prospects. Overall, Infibeam Avenues looks like a promising dividend stock in this analysis, and we think it would be worth investigating further.

While it's tempting to invest in Infibeam Avenues for the dividends alone, you should always be mindful of the risks involved. Our analysis shows 1 warning sign for Infibeam Avenues and you should be aware of it before buying any shares.

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.

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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.