Gillette India Limited (NSE:GILLETTE) Will Pay A ₹33.00 Dividend In Three Days

Gillette India Limited (NSE:GILLETTE) stock is about to trade ex-dividend in 3 days. You can purchase shares before the 11th of February in order to receive the dividend, which the company will pay on the 6th of March.

Gillette India's next dividend payment will be ₹33.00 per share. Last year, in total, the company distributed ₹66.00 to shareholders. Calculating the last year's worth of payments shows that Gillette India has a trailing yield of 1.2% on the current share price of ₹5659.15. If you buy this business for its dividend, you should have an idea of whether Gillette India's dividend is reliable and sustainable. That's why we should always check whether the dividend payments appear sustainable, and if the company is growing.

See our latest analysis for Gillette India

If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. Last year Gillette India paid out 97% of its profits as dividends to shareholders, suggesting the dividend is not well covered by earnings. A useful secondary check can be to evaluate whether Gillette India generated enough free cash flow to afford its dividend. Fortunately, it paid out only 41% of its free cash flow in the past year.

It's good to see that while Gillette India's dividends were not well covered by profits, at least they are affordable from a cash perspective. Still, if this were to happen repeatedly, we'd be concerned about whether the dividend is sustainable in a downturn.

Click here to see how much of its profit Gillette India paid out over the last 12 months.

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 fall far enough, the company could be forced to cut its dividend. That's why it's comforting to see Gillette India's earnings have been skyrocketing, up 22% per annum for the past five years.

Many investors will assess a company's dividend performance by evaluating how much the dividend payments have changed over time. Gillette India has delivered 16% dividend growth per year on average over the past 10 years. Both per-share earnings and dividends have both been growing rapidly in recent times, which is great to see.

The Bottom Line

Is Gillette India an attractive dividend stock, or better left on the shelf? Earnings per share have been rising nicely although, even though its cashflow payout ratio is low, we question why Gillette India is paying out so much of its profit. Overall, it's not a bad combination, but we feel that there are likely more attractive dividend prospects out there.

While it's tempting to invest in Gillette India for the dividends alone, you should always be mindful of the risks involved. Case in point: We've spotted 1 warning sign for Gillette India you should be aware of.

We wouldn't recommend just buying the first dividend stock you see, though. Here's a list of interesting 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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