UTI Asset Management Company Limited (NSE:UTIAMC) Looks Like A Good Stock, And It's Going Ex-Dividend Soon

It looks like UTI Asset Management Company Limited (NSE:UTIAMC) is about to go ex-dividend in the next 3 days. The ex-dividend date is one business day before a company's record date, which is the date on which the company determines which shareholders are entitled 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, UTI Asset Management investors that purchase the stock on or after the 18th of July will not receive the dividend, which will be paid on the 24th of August.

The company's next dividend payment will be ₹47.00 per share, and in the last 12 months, the company paid a total of ₹24.00 per share. Calculating the last year's worth of payments shows that UTI Asset Management has a trailing yield of 2.3% on the current share price of ₹1056.80. Dividends are a major contributor to investment returns for long term holders, but only if the dividend continues to be paid. As a result, readers should always check whether UTI Asset Management has been able to grow its dividends, or if the dividend might be cut.

View our latest analysis for UTI Asset Management

If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. UTI Asset Management paid out a comfortable 40% of its profit last year.

Generally speaking, the lower a company's payout ratios, the more resilient its dividend usually is.

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

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. If business enters a downturn and the dividend is cut, the company could see its value fall precipitously. Fortunately for readers, UTI Asset Management's earnings per share have been growing at 17% 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. UTI Asset Management has delivered 12% dividend growth per year on average over the past three years. Both per-share earnings and dividends have both been growing rapidly in recent times, which is great to see.

Final Takeaway

Is UTI Asset Management worth buying for its dividend? Companies like UTI Asset Management 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. UTI Asset Management 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.

So while UTI Asset Management looks good from a dividend perspective, it's always worthwhile being up to date with the risks involved in this stock. Be aware that UTI Asset Management is showing 2 warning signs in our investment analysis, and 1 of those doesn't sit too well with us...

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.

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