Is It Worth Considering Maharashtra Scooters Ltd. (NSE:MAHSCOOTER) For Its Upcoming Dividend?

It looks like Maharashtra Scooters Ltd. (NSE:MAHSCOOTER) is about to go ex-dividend in the next 3 days. Typically, the ex-dividend date is one business day before the record date which is the date on which a company determines the shareholders eligible to receive a dividend. It is important to be aware of the ex-dividend date because any trade on the stock needs to have been settled on or before the record date. Accordingly, Maharashtra Scooters investors that purchase the stock on or after the 28th of June will not receive the dividend, which will be paid on the 27th of July.

The company's upcoming dividend is ₹60.00 a share, following on from the last 12 months, when the company distributed a total of ₹170 per share to shareholders. Based on the last year's worth of payments, Maharashtra Scooters has a trailing yield of 2.0% on the current stock price of ₹8310.45. If you buy this business for its dividend, you should have an idea of whether Maharashtra Scooters's dividend is reliable and sustainable. So we need to investigate whether Maharashtra Scooters can afford its dividend, and if the dividend could grow.

View our latest analysis for Maharashtra Scooters

If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. Last year Maharashtra Scooters paid out 97% of its profits as dividends to shareholders, suggesting the dividend is not well covered by earnings.

When a company pays out a dividend that is not well covered by profits, the dividend is generally seen as more vulnerable to being cut.

Click here to see how much of its profit Maharashtra Scooters 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. 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 Maharashtra Scooters's earnings have been skyrocketing, up 22% per annum for the past five years.

Many investors will assess a company's dividend performance by evaluating how much the dividend payments have changed over time. Maharashtra Scooters has delivered an average of 24% per year annual increase in its dividend, based on the past 10 years of dividend payments. It's great to see earnings per share growing rapidly over several years, and dividends per share growing right along with it.

The Bottom Line

Should investors buy Maharashtra Scooters for the upcoming dividend? We're not enthused to see Maharashtra Scooters's dividend was not well covered by earnings over the last year, although it is great to see earnings growing. In sum this is a middling combination, and we find it hard to get excited about the company from a dividend perspective.

So if you want to do more digging on Maharashtra Scooters, you'll find it worthwhile knowing the risks that this stock faces. For example, we've found 1 warning sign for Maharashtra Scooters that we recommend you consider before investing in the business.

If you're in the market for strong dividend payers, we recommend checking our selection of top dividend stocks.

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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.

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