Be Sure To Check Out Amrutanjan Health Care Limited (NSE:AMRUTANJAN) Before It Goes Ex-Dividend

Amrutanjan Health Care Limited (NSE:AMRUTANJAN) stock is about to trade ex-dividend in 3 days. The ex-dividend date is one business day before the record date, which is the cut-off date for shareholders to be present on the company's books to be eligible for a dividend payment. 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 Amrutanjan Health Care's shares on or after the 16th of September, you won't be eligible to receive the dividend, when it is paid on the 23rd of October.

The company's next dividend payment will be ₹2.60 per share, on the back of last year when the company paid a total of ₹4.60 to shareholders. Looking at the last 12 months of distributions, Amrutanjan Health Care has a trailing yield of approximately 0.6% on its current stock price of ₹789.10. Dividends are an important source of income to many shareholders, but the health of the business is crucial to maintaining those dividends. So we need to investigate whether Amrutanjan Health Care can afford its dividend, and if the dividend could grow.

View our latest analysis for Amrutanjan Health Care

Dividends are typically paid from company earnings. If a company pays more in dividends than it earned in profit, then the dividend could be unsustainable. That's why it's good to see Amrutanjan Health Care paying out a modest 30% of its earnings. A useful secondary check can be to evaluate whether Amrutanjan Health Care generated enough free cash flow to afford its dividend. It paid out more than half (63%) of its free cash flow in the past year, which is within an average range for most companies.

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 Amrutanjan Health Care 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 business enters a downturn and the dividend is cut, the company could see its value fall precipitously. Fortunately for readers, Amrutanjan Health Care's earnings per share have been growing at 11% a year for the past five years. Amrutanjan Health Care is paying out a bit over half its earnings, which suggests the company is striking a balance between reinvesting in growth, and paying dividends. Given the quick rate of earnings per share growth and current level of payout, there may be a chance of further dividend increases in the future.

Many investors will assess a company's dividend performance by evaluating how much the dividend payments have changed over time. Since the start of our data, 10 years ago, Amrutanjan Health Care has lifted its dividend by approximately 12% a year on average. Both per-share earnings and dividends have both been growing rapidly in recent times, which is great to see.

To Sum It Up

Has Amrutanjan Health Care got what it takes to maintain its dividend payments? From a dividend perspective, we're encouraged to see that earnings per share have been growing, the company is paying out less than half of its earnings, and a bit over half its free cash flow. There's a lot to like about Amrutanjan Health Care, and we would prioritise taking a closer look at it.

On that note, you'll want to research what risks Amrutanjan Health Care is facing. Case in point: We've spotted 1 warning sign for Amrutanjan Health Care 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.