N R Agarwal Industries Limited (NSE:NRAIL) Looks Like A Good Stock, And It's Going Ex-Dividend Soon

It looks like N R Agarwal Industries Limited (NSE:NRAIL) is about to go ex-dividend in the next 3 days. The ex-dividend date is usually set to be one business day before the record date which is the cut-off date on which you must be present on the company's books as a shareholder in order to receive the dividend. The ex-dividend date is an important date to be aware of as any purchase of the stock made on or after this date might mean a late settlement that doesn't show on the record date. Therefore, if you purchase N R Agarwal Industries' shares on or after the 16th of August, you won't be eligible to receive the dividend, when it is paid on the 16th of September.

The company's next dividend payment will be ₹2.00 per share. Last year, in total, the company distributed ₹2.00 to shareholders. Based on the last year's worth of payments, N R Agarwal Industries has a trailing yield of 0.4% on the current stock price of ₹456.05. 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 N R Agarwal Industries can afford its dividend, and if the dividend could grow.

Check out our latest analysis for N R Agarwal Industries

Dividends are usually paid out of company profits, so if a company pays out more than it earned then its dividend is usually at greater risk of being cut. N R Agarwal Industries is paying out just 2.7% of its profit after tax, which is comfortably low and leaves plenty of breathing room in the case of adverse events. That said, even highly profitable companies sometimes might not generate enough cash to pay the dividend, which is why we should always check if the dividend is covered by cash flow. N R Agarwal Industries paid a dividend despite reporting negative free cash flow over the last twelve months. This may be due to heavy investment in the business, but this is still suboptimal from a dividend sustainability perspective.

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

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 fall far enough, the company could be forced to cut its dividend. With that in mind, we're encouraged by the steady growth at N R Agarwal Industries, with earnings per share up 5.8% on average over the last five years.

Many investors will assess a company's dividend performance by evaluating how much the dividend payments have changed over time. It looks like the N R Agarwal Industries dividends are largely the same as they were seven years ago.

Final Takeaway

Has N R Agarwal Industries got what it takes to maintain its dividend payments? N R Agarwal Industries delivered reasonable earnings per share growth in recent times, and paid out less than half its profits and -0.0008% of its cash flow over the last year, which is a mediocre outcome. To summarise, N R Agarwal Industries looks okay on this analysis, although it doesn't appear a stand-out opportunity.

If you want to look further into N R Agarwal Industries, it's worth knowing the risks this business faces. Be aware that N R Agarwal Industries is showing 4 warning signs in our investment analysis, and 1 of those makes us a bit uncomfortable...

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.