Tide Water Oil Co. (India) Limited (NSE:TIDEWATER) Stock Goes Ex-Dividend In Just Three Days

Readers hoping to buy Tide Water Oil Co. (India) Limited (NSE:TIDEWATER) for its dividend will need to make their move shortly, as the stock is about to trade ex-dividend. 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 of consequence because whenever a stock is bought or sold, the trade takes at least two business day to settle. This means that investors who purchase Tide Water Oil (India)'s shares on or after the 4th of July will not receive the dividend, which will be paid on the 22nd of September.

The company's upcoming dividend is ₹20.00 a share, following on from the last 12 months, when the company distributed a total of ₹47.00 per share to shareholders. Based on the last year's worth of payments, Tide Water Oil (India) stock has a trailing yield of around 2.3% on the current share price of ₹2291.25. If you buy this business for its dividend, you should have an idea of whether Tide Water Oil (India)'s dividend is reliable and sustainable. So we need to check whether the dividend payments are covered, and if earnings are growing.

See our latest analysis for Tide Water Oil (India)

If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. Tide Water Oil (India) is paying out an acceptable 62% of its profit, a common payout level among most companies. 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. Over the last year, it paid out more than three-quarters (76%) of its free cash flow generated, which is fairly high and may be starting to limit reinvestment in the business.

It's positive to see that Tide Water Oil (India)'s dividend is covered by both profits and cash flow, since this is generally a sign that the dividend is sustainable, and a lower payout ratio usually suggests a greater margin of safety before the dividend gets cut.

Click here to see how much of its profit Tide Water Oil (India) 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 Tide Water Oil (India), with earnings per share up 7.6% on average over the last five years. Decent historical earnings per share growth suggests Tide Water Oil (India) has been effectively growing value for shareholders. However, it's now paying out more than half its earnings as dividends. If management lifts the payout ratio further, we'd take this as a tacit signal that the company's growth prospects are slowing.

Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. Tide Water Oil (India) has delivered an average of 18% per year annual increase in its dividend, based on the past 10 years of dividend payments. We're glad to see dividends rising alongside earnings over a number of years, which may be a sign the company intends to share the growth with shareholders.

Final Takeaway

Is Tide Water Oil (India) an attractive dividend stock, or better left on the shelf? Earnings per share have been growing modestly and Tide Water Oil (India) paid out a bit over half of its earnings and free cash flow last year. In summary, it's hard to get excited about Tide Water Oil (India) from a dividend perspective.

If you want to look further into Tide Water Oil (India), it's worth knowing the risks this business faces. Case in point: We've spotted 1 warning sign for Tide Water Oil (India) you should be aware of.

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.

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