Nippon Life India Asset Management Limited (NSE:NAM-INDIA) Stock Goes Ex-Dividend In Just Three Days

It looks like Nippon Life India Asset Management Limited (NSE:NAM-INDIA) is about to go ex-dividend in the next 3 days. The ex-dividend date is usually set to be one business day before the record date which is the cut-off date on which you must be present on the company's books as a shareholder in order to receive the 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. Therefore, if you purchase Nippon Life India Asset Management's shares on or after the 6th of November, you won't be eligible to receive the dividend, when it is paid on the 23rd of November.

The company's upcoming dividend is ₹8.00 a share, following on from the last 12 months, when the company distributed a total of ₹19.00 per share to shareholders. Looking at the last 12 months of distributions, Nippon Life India Asset Management has a trailing yield of approximately 2.7% on its current stock price of ₹713.45. We love seeing companies pay a dividend, but it's also important to be sure that laying the golden eggs isn't going to kill our golden goose! So we need to investigate whether Nippon Life India Asset Management can afford its dividend, and if the dividend could grow.

See our latest analysis for Nippon Life India Asset Management

If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. Last year, Nippon Life India Asset Management paid out 91% of its income as dividends, which is above a level that we're comfortable with, especially if the company needs to reinvest in its business.

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 the company's payout ratio, plus analyst estimates of its future dividends.

Have Earnings And Dividends Been Growing?

Stocks in companies that generate sustainable earnings growth often make the best dividend prospects, as it is easier to lift the dividend when earnings are rising. If earnings decline and the company is forced to cut its dividend, investors could watch the value of their investment go up in smoke. It's encouraging to see Nippon Life India Asset Management has grown its earnings rapidly, up 21% 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 last seven years, Nippon Life India Asset Management has lifted its dividend by approximately 21% a year on average. Both per-share earnings and dividends have both been growing rapidly in recent times, which is great to see.

To Sum It Up

Should investors buy Nippon Life India Asset Management for the upcoming dividend? Nippon Life India Asset Management has been generating credible earnings per share growth, although its dividend payments were not adequately covered by earnings. At best we would put it on a watch-list to see if business conditions improve, as it doesn't look like a clear opportunity right now.

If you're not too concerned about Nippon Life India Asset Management's ability to pay dividends, you should still be mindful of some of the other risks that this business faces. To help with this, we've discovered 1 warning sign for Nippon Life India Asset Management that you should be aware of before investing in their shares.

A common investing mistake is buying the first interesting stock you see. Here you can find a full list of high-yield 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.