There's A Lot To Like About Mahickra Chemicals' (NSE:MAHICKRA) Upcoming ₹0.20 Dividend

It looks like Mahickra Chemicals Limited (NSE:MAHICKRA) is about to go ex-dividend in the next three days. You can purchase shares before the 4th of March in order to receive the dividend, which the company will pay on the 19th of March.

Mahickra Chemicals's next dividend payment will be ₹0.20 per share, on the back of last year when the company paid a total of ₹0.30 to shareholders. Last year's total dividend payments show that Mahickra Chemicals has a trailing yield of 0.4% on the current share price of ₹78.9. 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 Mahickra Chemicals can afford its dividend, and if the dividend could grow.

See our latest analysis for Mahickra Chemicals

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. Mahickra Chemicals has a low and conservative payout ratio of just 7.4% of its income after tax.

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

Have Earnings And Dividends Been Growing?

Companies with consistently growing earnings per share generally make the best dividend stocks, as they usually find it easier to grow dividends per share. If earnings fall far enough, the company could be forced to cut its dividend. It's encouraging to see Mahickra Chemicals has grown its earnings rapidly, up 73% a year for the past five years.

Mahickra Chemicals also issued more than 5% of its market cap in new stock during the past year, which we feel is likely to hurt its dividend prospects in the long run. It's hard to grow dividends per share when a company keeps creating new shares.

Given that Mahickra Chemicals has only been paying a dividend for a year, there's not much of a past history to draw insight from.

The Bottom Line

Is Mahickra Chemicals worth buying for its dividend? Mahickra Chemicals has been growing earnings at a rapid rate, and has a conservatively low payout ratio, implying that it is reinvesting heavily in its business; a sterling combination. Overall we think this is an attractive combination and worthy of further research.

So while Mahickra Chemicals looks good from a dividend perspective, it's always worthwhile being up to date with the risks involved in this stock. For instance, we've identified 3 warning signs for Mahickra Chemicals (2 make us uncomfortable) you should be aware of.

A common investment mistake is buying the first interesting stock you see. Here you can find a list of promising 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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