There's A Lot To Like About Jeena Sikho Lifecare's (NSE:JSLL) Upcoming ₹4.18 Dividend

Some investors rely on dividends for growing their wealth, and if you're one of those dividend sleuths, you might be intrigued to know that Jeena Sikho Lifecare Limited (NSE:JSLL) is about to go ex-dividend in just 3 days. Typically, the ex-dividend date is one business day before the record date which is the date on which a company determines the shareholders eligible 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. This means that investors who purchase Jeena Sikho Lifecare's shares on or after the 20th of August will not receive the dividend, which will be paid on the 27th of September.

The company's next dividend payment will be ₹4.18 per share, and in the last 12 months, the company paid a total of ₹4.18 per share. Last year's total dividend payments show that Jeena Sikho Lifecare has a trailing yield of 0.3% on the current share price of ₹1239.95. Dividends are a major contributor to investment returns for long term holders, but only if the dividend continues to be paid. As a result, readers should always check whether Jeena Sikho Lifecare has been able to grow its dividends, or if the dividend might be cut.

Check out our latest analysis for Jeena Sikho Lifecare

If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. Jeena Sikho Lifecare has a low and conservative payout ratio of just 15% of its income after tax. 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. Luckily it paid out just 13% of its free cash flow last year.

It's positive to see that Jeena Sikho Lifecare'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 Jeena Sikho Lifecare 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 decline and the company is forced to cut its dividend, investors could watch the value of their investment go up in smoke. It's encouraging to see Jeena Sikho Lifecare has grown its earnings rapidly, up 53% a year for the past five years. Jeena Sikho Lifecare earnings per share have been sprinting ahead like the Road Runner at a track and field day; scarcely stopping even for a cheeky "beep-beep". We also like that it is reinvesting most of its profits in its business.'

Given that Jeena Sikho Lifecare has only been paying a dividend for a year, there's not much of a past history to draw insight from.

The Bottom Line

Should investors buy Jeena Sikho Lifecare for the upcoming dividend? We love that Jeena Sikho Lifecare is growing earnings per share while simultaneously paying out a low percentage of both its earnings and cash flow. These characteristics suggest the company is reinvesting in growing its business, while the conservative payout ratio also implies a reduced risk of the dividend being cut in the future. It's a promising combination that should mark this company worthy of closer attention.

While it's tempting to invest in Jeena Sikho Lifecare for the dividends alone, you should always be mindful of the risks involved. We've identified 3 warning signs with Jeena Sikho Lifecare (at least 1 which makes us a bit uncomfortable), and understanding these should be part of your investment process.

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.