Emmbi Industries Limited (NSE:EMMBI) Pays A ₹0.30 Dividend In Just Three Days

Emmbi Industries Limited (NSE:EMMBI) stock is about to trade ex-dividend in three 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. 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. Meaning, you will need to purchase Emmbi Industries' shares before the 12th of September to receive the dividend, which will be paid on the 19th of October.

The company's next dividend payment will be ₹0.30 per share, and in the last 12 months, the company paid a total of ₹0.30 per share. Looking at the last 12 months of distributions, Emmbi Industries has a trailing yield of approximately 0.3% on its current stock price of ₹103.54. 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 check whether the dividend payments are covered, and if earnings are 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. Emmbi Industries paid out just 8.9% of its profit last year, which we think is conservatively low and leaves plenty of margin for unexpected circumstances. A useful secondary check can be to evaluate whether Emmbi Industries generated enough free cash flow to afford its dividend. The good news is it paid out just 8.8% of its free cash flow in the last year.

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.

See our latest analysis for Emmbi Industries

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

Have Earnings And Dividends Been Growing?

When earnings decline, dividend companies become much harder to analyse and own safely. If earnings decline and the company is forced to cut its dividend, investors could watch the value of their investment go up in smoke. Emmbi Industries's earnings per share have fallen at approximately 17% a year over the previous five years. Such a sharp decline casts doubt on the future sustainability of the dividend.

Many investors will assess a company's dividend performance by evaluating how much the dividend payments have changed over time. In the last 10 years, Emmbi Industries has lifted its dividend by approximately 1.8% a year on average.

To Sum It Up

Is Emmbi Industries an attractive dividend stock, or better left on the shelf? Earnings per share are down meaningfully, although at least the company is paying out a low and conservative percentage of both its earnings and cash flow. It's definitely not great to see earnings falling, but at least there may be some buffer before the dividend needs to be cut. Overall, it's hard to get excited about Emmbi Industries from a dividend perspective.

On that note, you'll want to research what risks Emmbi Industries is facing. Every company has risks, and we've spotted 5 warning signs for Emmbi Industries (of which 2 make us uncomfortable!) you should know about.

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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.