Four Days Left Until Apcotex Industries Limited (NSE:APCOTEXIND) Trades Ex-Dividend

Apcotex Industries Limited (NSE:APCOTEXIND) is about to trade ex-dividend in the next 4 days. Investors can purchase shares before the 11th of February in order to be eligible for this dividend, which will be paid on the 27th of February.

Apcotex Industries's upcoming dividend is ₹1.50 a share, following on from the last 12 months, when the company distributed a total of ₹1.50 per share to shareholders. Based on the last year's worth of payments, Apcotex Industries has a trailing yield of 0.8% on the current stock price of ₹181.35. 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 Apcotex Industries can afford its dividend, and if the dividend could grow.

View our latest analysis for Apcotex Industries

Dividends are typically paid out of company income, so if a company pays out more than it earned, its dividend is usually at a higher risk of being cut. That's why it's good to see Apcotex Industries paying out a modest 32% of its earnings. A useful secondary check can be to evaluate whether Apcotex Industries generated enough free cash flow to afford its dividend. It paid out 80% of its free cash flow as dividends, which is within usual limits but will limit the company's ability to lift the dividend if there's no growth.

It's encouraging to see that the dividend is covered by both profit and cash flow. This generally suggests the dividend is sustainable, as long as earnings don't drop precipitously.

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

Have Earnings And Dividends Been Growing?

Stocks with flat earnings can still be attractive dividend payers, but it is important to be more conservative with your approach and demand a greater margin for safety when it comes to dividend sustainability. If earnings decline and the company is forced to cut its dividend, investors could watch the value of their investment go up in smoke. That explains why we're not overly excited about Apcotex Industries's flat earnings over the past five years. Better than seeing them fall off a cliff, for sure, but the best dividend stocks grow their earnings meaningfully over the long run.

Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. Apcotex Industries has delivered an average of 12% per year annual increase in its dividend, based on the past 10 years of dividend payments.

The Bottom Line

Should investors buy Apcotex Industries for the upcoming dividend? Its earnings per share are effectively flat in recent times. The company paid out less than half its income and more than half its cash flow as dividends to shareholders. Overall we're not hugely bearish on the stock, but there are likely better dividend investments out there.

However if you're still interested in Apcotex Industries as a potential investment, you should definitely consider some of the risks involved with Apcotex Industries. In terms of investment risks, we've identified 1 warning sign with Apcotex Industries and understanding them should be part of your investment process.

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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