Interested In Shree Pushkar Chemicals & Fertilisers' (NSE:SHREEPUSHK) Upcoming ₹1.50 Dividend? You Have Three Days Left

Regular readers will know that we love our dividends at Simply Wall St, which is why it's exciting to see Shree Pushkar Chemicals & Fertilisers Limited (NSE:SHREEPUSHK) 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. The ex-dividend date is important as the process of settlement involves two full business days. So if you miss that date, you would not show up on the company's books on the record date. Thus, you can purchase Shree Pushkar Chemicals & Fertilisers' shares before the 22nd of September in order to receive the dividend, which the company will pay on the 30th of October.

The company's upcoming dividend is ₹1.50 a share, following on from the last 12 months, when the company distributed a total of ₹1.50 per share to shareholders. Based on the last year's worth of payments, Shree Pushkar Chemicals & Fertilisers stock has a trailing yield of around 0.7% on the current share price of ₹206.95. If you buy this business for its dividend, you should have an idea of whether Shree Pushkar Chemicals & Fertilisers's dividend is reliable and sustainable. So we need to investigate whether Shree Pushkar Chemicals & Fertilisers can afford its dividend, and if the dividend could grow.

View our latest analysis for Shree Pushkar Chemicals & Fertilisers

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. Shree Pushkar Chemicals & Fertilisers is paying out just 13% of its profit after tax, which is comfortably low and leaves plenty of breathing room in the case of adverse events. Yet cash flows are even more important than profits for assessing a dividend, so we need to see if the company generated enough cash to pay its distribution. Thankfully its dividend payments took up just 26% of the free cash flow it generated, which is a comfortable payout ratio.

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.

Click here to see how much of its profit Shree Pushkar Chemicals & Fertilisers 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. Investors love dividends, so if earnings fall and the dividend is reduced, expect a stock to be sold off heavily at the same time. That's why it's not ideal to see Shree Pushkar Chemicals & Fertilisers's earnings per share have been shrinking at 4.3% a year over the previous five years.

Many investors will assess a company's dividend performance by evaluating how much the dividend payments have changed over time. Shree Pushkar Chemicals & Fertilisers has delivered 5.2% dividend growth per year on average over the past eight years.

To Sum It Up

Should investors buy Shree Pushkar Chemicals & Fertilisers for the upcoming dividend? Shree Pushkar Chemicals & Fertilisers has comfortably low cash and profit payout ratios, which may mean the dividend is sustainable even in the face of a sharp decline in earnings per share. Still, we consider declining earnings to be a warning sign. While it does have some good things going for it, we're a bit ambivalent and it would take more to convince us of Shree Pushkar Chemicals & Fertilisers's dividend merits.

With that in mind, a critical part of thorough stock research is being aware of any risks that stock currently faces. Every company has risks, and we've spotted 3 warning signs for Shree Pushkar Chemicals & Fertilisers you should know about.

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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.