Be Sure To Check Out Deepak Fertilisers And Petrochemicals Corporation Limited (NSE:DEEPAKFERT) Before It Goes Ex-Dividend

Deepak Fertilisers And Petrochemicals Corporation Limited (NSE:DEEPAKFERT) is about to trade ex-dividend in the next 3 days. Typically, the ex-dividend date is two business days before the record date, which is the date on which a company determines the shareholders eligible to receive a dividend. The ex-dividend date is of consequence because whenever a stock is bought or sold, the trade can take two business days or more to settle. This means that investors who purchase Deepak Fertilisers And Petrochemicals' shares on or after the 2nd of September will not receive the dividend, which will be paid on the 9th of October.

The company's next dividend payment will be ₹10.00 per share, and in the last 12 months, the company paid a total of ₹10.00 per share. Looking at the last 12 months of distributions, Deepak Fertilisers And Petrochemicals has a trailing yield of approximately 0.7% on its current stock price of ₹1428.80. Dividends are a major contributor to investment returns for long term holders, but only if the dividend continues to be paid. That's why we should always check whether the dividend payments appear sustainable, and if the company is growing.

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If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. Deepak Fertilisers And Petrochemicals is paying out just 14% of its profit after tax, which is comfortably low and leaves plenty of breathing room in the case of adverse events. A useful secondary check can be to evaluate whether Deepak Fertilisers And Petrochemicals generated enough free cash flow to afford its dividend. Luckily it paid out just 14% of its free cash flow last year.

It's positive to see that Deepak Fertilisers And Petrochemicals's dividend is covered by both profits and cash flow, since this is generally a sign that the dividend is sustainable, and a lower payout ratio usually suggests a greater margin of safety before the dividend gets cut.

See our latest analysis for Deepak Fertilisers And Petrochemicals

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

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 decline and the company is forced to cut its dividend, investors could watch the value of their investment go up in smoke. That's why it's comforting to see Deepak Fertilisers And Petrochemicals's earnings have been skyrocketing, up 51% per annum for the past five years. With earnings per share growing rapidly and the company sensibly reinvesting almost all of its profits within the business, Deepak Fertilisers And Petrochemicals looks like a promising growth company.

The main way most investors will assess a company's dividend prospects is by checking the historical rate of dividend growth. Deepak Fertilisers And Petrochemicals has delivered 9.6% dividend growth per year on average over the past 10 years. We're glad to see dividends rising alongside earnings over a number of years, which may be a sign the company intends to share the growth with shareholders.

Final Takeaway

Is Deepak Fertilisers And Petrochemicals an attractive dividend stock, or better left on the shelf? Deepak Fertilisers And Petrochemicals has grown its earnings per share while simultaneously reinvesting in the business. Unfortunately it's cut the dividend at least once in the past 10 years, but the conservative payout ratio makes the current dividend look sustainable. There's a lot to like about Deepak Fertilisers And Petrochemicals, and we would prioritise taking a closer look at it.

On that note, you'll want to research what risks Deepak Fertilisers And Petrochemicals is facing. In terms of investment risks, we've identified 2 warning signs with Deepak Fertilisers And Petrochemicals and understanding them should be part of your investment process.

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.