Piramal Enterprises Limited (NSE:PEL) Stock Goes Ex-Dividend In Just Four Days

By
Simply Wall St
Published
June 30, 2021
NSEI:PEL
Source: Shutterstock

Readers hoping to buy Piramal Enterprises Limited (NSE:PEL) for its dividend will need to make their move shortly, as the stock is about to trade ex-dividend. 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 important because any transaction on a stock needs to have been settled before the record date in order to be eligible for a dividend. Thus, you can purchase Piramal Enterprises' shares before the 6th of July in order to receive the dividend, which the company will pay on the 15th of August.

The company's next dividend payment will be ₹33.00 per share, and in the last 12 months, the company paid a total of ₹33.00 per share. Based on the last year's worth of payments, Piramal Enterprises has a trailing yield of 1.4% on the current stock price of ₹2398.25. Dividends are an important source of income to many shareholders, but the health of the business is crucial to maintaining those dividends. We need to see whether the dividend is covered by earnings and if it's growing.

View our latest analysis for Piramal Enterprises

If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. Piramal Enterprises is paying out an acceptable 59% of its profit, a common payout level among most companies.

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.

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

historic-dividend
NSEI:PEL Historic Dividend July 1st 2021

Have Earnings And Dividends Been Growing?

Companies that aren't growing their earnings can still be valuable, but it is even more important to assess the sustainability of the dividend if it looks like the company will struggle to grow. If earnings fall far enough, the company could be forced to cut its dividend. That explains why we're not overly excited about Piramal Enterprises's flat earnings over the past five years. It's better than seeing them drop, certainly, but over the long term, all of the best dividend stocks are able to meaningfully grow their earnings per share.

Piramal Enterprises also issued more than 5% of its market cap in new stock during the past year, which we feel is likely to hurt its dividend prospects in the long run. It's hard to grow dividends per share when a company keeps creating new shares.

Many investors will assess a company's dividend performance by evaluating how much the dividend payments have changed over time. In the last 10 years, Piramal Enterprises has lifted its dividend by approximately 19% a year on average.

The Bottom Line

Has Piramal Enterprises got what it takes to maintain its dividend payments? Piramal Enterprises's earnings are effectively flat over recent years, even as the company pays out more than half of its earnings to shareholders as dividends. We think there are likely better opportunities out there.

If you want to look further into Piramal Enterprises, it's worth knowing the risks this business faces. Every company has risks, and we've spotted 5 warning signs for Piramal Enterprises (of which 1 is a bit unpleasant!) you should know about.

A common investment mistake is buying the first interesting stock you see. Here you can find a list of promising dividend stocks with a greater than 2% yield and an upcoming dividend.

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This article by Simply Wall St is general in nature. 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.
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