KFin Technologies Limited (NSE:KFINTECH) Looks Like A Good Stock, And It's Going Ex-Dividend Soon

It looks like KFin Technologies Limited (NSE:KFINTECH) is about to go ex-dividend in the next three days. Typically, the ex-dividend date is two business days before the record date, which is the date on which a company determines the shareholders eligible to receive a dividend. The ex-dividend date is of consequence because whenever a stock is bought or sold, the trade can take two business days or more to settle. Thus, you can purchase KFin Technologies' shares before the 22nd of August in order to receive the dividend, which the company will pay on the 27th of September.

The company's upcoming dividend is ₹7.50 a share, following on from the last 12 months, when the company distributed a total of ₹7.50 per share to shareholders. Calculating the last year's worth of payments shows that KFin Technologies has a trailing yield of 0.7% on the current share price of ₹1128.90. If you buy this business for its dividend, you should have an idea of whether KFin Technologies's dividend is reliable and sustainable. So we need to investigate whether KFin Technologies can afford its dividend, and if the dividend could grow.

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If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. KFin Technologies paid out a comfortable 39% of its profit last year.

When a company paid out less in dividends than it earned in profit, this generally suggests its dividend is affordable. The lower the % of its profit that it pays out, the greater the margin of safety for the dividend if the business enters a downturn.

View our latest analysis for KFin Technologies

Click here to see the company's payout ratio, plus analyst estimates of its future dividends.

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. It's encouraging to see KFin Technologies has grown its earnings rapidly, up 134% a year for the past five years.

Given that KFin Technologies has only been paying a dividend for a year, there's not much of a past history to draw insight from.

Final Takeaway

Has KFin Technologies got what it takes to maintain its dividend payments? Companies like KFin Technologies that are growing rapidly and paying out a low fraction of earnings, are usually reinvesting heavily in their business. This is one of the most attractive investment combinations under this analysis, as it can create substantial value for investors over the long run. KFin Technologies ticks a lot of boxes for us from a dividend perspective, and we think these characteristics should mark the company as deserving of further attention.

Curious what other investors think of KFin Technologies? See what analysts are forecasting, with this visualisation of its historical and future estimated earnings and cash flow.

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.