Poddar Pigments Limited (NSE:PODDARMENT) Passed Our Checks, And It's About To Pay A ₹4.00 Dividend

It looks like Poddar Pigments Limited (NSE:PODDARMENT) is about to go 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. 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. Meaning, you will need to purchase Poddar Pigments' shares before the 16th of September to receive the dividend, which will be paid on the 23rd of October.

The company's next dividend payment will be ₹4.00 per share. Last year, in total, the company distributed ₹4.00 to shareholders. Based on the last year's worth of payments, Poddar Pigments has a trailing yield of 1.0% on the current stock price of ₹407.75. Dividends are an important source of income to many shareholders, but the health of the business is crucial to maintaining those dividends. As a result, readers should always check whether Poddar Pigments has been able to grow its dividends, or if the dividend might be cut.

Check out our latest analysis for Poddar Pigments

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. Poddar Pigments has a low and conservative payout ratio of just 15% of its income after tax.

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

Have Earnings And Dividends Been Growing?

Businesses with strong growth prospects usually make the best dividend payers, because it's easier to grow dividends when earnings per share are improving. If business enters a downturn and the dividend is cut, the company could see its value fall precipitously. For this reason, we're glad to see Poddar Pigments's earnings per share have risen 12% per annum over the last five years.

Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. Since the start of our data, 10 years ago, Poddar Pigments has lifted its dividend by approximately 5.9% a year on average. Earnings per share have been growing much quicker than dividends, potentially because Poddar Pigments is keeping back more of its profits to grow the business.

Final Takeaway

Has Poddar Pigments got what it takes to maintain its dividend payments? Typically, companies that are growing rapidly and paying out a low fraction of earnings are keeping the profits for reinvestment in the business. Perhaps even more importantly - this can sometimes signal management is focused on the long term future of the business. Poddar Pigments ticks a lot of boxes for us from a dividend perspective, and we think these characteristics should mark the company as deserving of further attention.

On that note, you'll want to research what risks Poddar Pigments is facing. For example, we've found 2 warning signs for Poddar Pigments that we recommend you consider before investing in the business.

A common investing mistake is buying the first interesting stock you see. Here you can find a full list of high-yield 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.