Should Income Investors Look At Bajaj Consumer Care Limited (NSE:BAJAJCON) Before Its Ex-Dividend?

Readers hoping to buy Bajaj Consumer Care Limited (NSE:BAJAJCON) for its dividend will need to make their move shortly, as the stock is about to trade ex-dividend. Ex-dividend means that investors that purchase the stock on or after the 11th of February will not receive this dividend, which will be paid on the 5th of March.

Bajaj Consumer Care's next dividend payment will be ₹6.00 per share, on the back of last year when the company paid a total of ₹6.00 to shareholders. Based on the last year's worth of payments, Bajaj Consumer Care has a trailing yield of 2.3% on the current stock price of ₹258.6. If you buy this business for its dividend, you should have an idea of whether Bajaj Consumer Care's dividend is reliable and sustainable. We need to see whether the dividend is covered by earnings and if it's growing.

Check out our latest analysis for Bajaj Consumer Care

If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. Bajaj Consumer Care paid out 62% of its earnings to investors last year, a normal payout level for most businesses.

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

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. If earnings decline and the company is forced to cut its dividend, investors could watch the value of their investment go up in smoke. This is why it's a relief to see Bajaj Consumer Care earnings per share are up 2.1% per annum over the last five years. Earnings per share growth has been slim, and the company is already paying out a majority of its earnings. While there is some room to both increase the payout ratio and reinvest in the business, generally the higher a payout ratio goes, the lower a company's prospects for future growth.

Many investors will assess a company's dividend performance by evaluating how much the dividend payments have changed over time. Bajaj Consumer Care has delivered an average of 14% per year annual increase in its dividend, based on the past nine years of dividend payments. It's encouraging to see the company lifting dividends while earnings are growing, suggesting at least some corporate interest in rewarding shareholders.

To Sum It Up

Has Bajaj Consumer Care got what it takes to maintain its dividend payments? Bajaj Consumer Care has been generating some growth in earnings per share while paying out more than half of its earnings to shareholders in the form of dividends. In summary, Bajaj Consumer Care appears to have some promise as a dividend stock, and we'd suggest taking a closer look at it.

With that in mind, a critical part of thorough stock research is being aware of any risks that stock currently faces. Every company has risks, and we've spotted 2 warning signs for Bajaj Consumer Care you should know about.

If you're in the market for dividend stocks, we recommend checking our list of top 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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