Gallantt Ispat Limited (NSE:GALLANTT) Looks Interesting, And It's About To Pay A Dividend

Regular readers will know that we love our dividends at Simply Wall St, which is why it's exciting to see Gallantt Ispat Limited (NSE:GALLANTT) is about to trade ex-dividend in the next three days. The ex-dividend date is one business day before a company's record date, which is the date on which the company determines which shareholders are entitled 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. This means that investors who purchase Gallantt Ispat's shares on or after the 23rd of September will not receive the dividend, which will be paid on the 30th of October.

The company's next dividend payment will be ₹1.00 per share, on the back of last year when the company paid a total of ₹1.00 to shareholders. Based on the last year's worth of payments, Gallantt Ispat stock has a trailing yield of around 0.3% on the current share price of ₹387.75. If you buy this business for its dividend, you should have an idea of whether Gallantt Ispat's dividend is reliable and sustainable. So we need to investigate whether Gallantt Ispat can afford its dividend, and if the dividend could grow.

See our latest analysis for Gallantt Ispat

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. Gallantt Ispat paid out just 11% of its profit last year, which we think is conservatively low and leaves plenty of margin for unexpected circumstances.

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

Have Earnings And Dividends Been Growing?

Companies that aren't growing their earnings can still be valuable, but it is even more important to assess the sustainability of the dividend if it looks like the company will struggle to grow. Investors love dividends, so if earnings fall and the dividend is reduced, expect a stock to be sold off heavily at the same time. It's not encouraging to see that Gallantt Ispat's earnings are effectively flat over the past five years. It's better than seeing them drop, certainly, but over the long term, all of the best dividend stocks are able to meaningfully grow their earnings per share. Growth has been anaemic. Yet with more than 75% of its earnings being kept in the business, there is ample room to reinvest in growth or lift the payout ratio - either of which could increase 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 six years, Gallantt Ispat has lifted its dividend by approximately 26% a year on average.

The Bottom Line

Is Gallantt Ispat an attractive dividend stock, or better left on the shelf? Gallantt Ispat has seen its earnings per share stagnate in recent years, although the company reinvests more than half of its profits in the business, which could bode well for its future prospects. In summary, Gallantt Ispat appears to have some promise as a dividend stock, and we'd suggest taking a closer look at it.

While it's tempting to invest in Gallantt Ispat for the dividends alone, you should always be mindful of the risks involved. For example, we've found 1 warning sign for Gallantt Ispat that we recommend you consider before investing in the business.

If you're in the market for strong dividend payers, we recommend checking our selection of top dividend stocks.

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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.