Maharashtra Scooters Ltd. (NSE:MAHSCOOTER) Will Pay A ₹110.00 Dividend In Two Days

It looks like Maharashtra Scooters Ltd. (NSE:MAHSCOOTER) is about to go ex-dividend in the next 2 days. 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. Thus, you can purchase Maharashtra Scooters' shares before the 25th of September in order to receive the dividend, which the company will pay on the 10th of October.

The company's next dividend payment will be ₹110.00 per share, and in the last 12 months, the company paid a total of ₹170 per share. Calculating the last year's worth of payments shows that Maharashtra Scooters has a trailing yield of 1.4% on the current share price of ₹12196.80. 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.

Check out 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. Maharashtra Scooters paid out 93% of its earnings, which is more than we're comfortable with, unless there are mitigating circumstances.

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?

Businesses with strong growth prospects usually make the best dividend payers, because it's easier to grow dividends when earnings per share are improving. Investors love dividends, so if earnings fall and the dividend is reduced, expect a stock to be sold off heavily at the same time. It's encouraging to see Maharashtra Scooters has grown its earnings rapidly, up 23% a year for the past five years.

Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. In the past 10 years, Maharashtra Scooters has increased its dividend at approximately 21% a year on average. It's exciting to see that both earnings and dividends per share have grown rapidly over the past few years.

To Sum It Up

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. It doesn't appear an outstanding opportunity, but could be worth a closer look.

If you want to look further into Maharashtra Scooters, it's worth knowing the risks this business faces. For example - Maharashtra Scooters has 1 warning sign we think you should be aware of.

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.