Be Sure To Check Out Lincoln Pharmaceuticals Limited (NSE:LINCOLN) Before It Goes Ex-Dividend

Readers hoping to buy Lincoln Pharmaceuticals Limited (NSE:LINCOLN) for its dividend will need to make their move shortly, as the stock is about to trade ex-dividend. 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. Meaning, you will need to purchase Lincoln Pharmaceuticals' shares before the 13th of September to receive the dividend, which will be paid on the 30th of October.

The company's next dividend payment will be ₹1.80 per share, and in the last 12 months, the company paid a total of ₹1.80 per share. Looking at the last 12 months of distributions, Lincoln Pharmaceuticals has a trailing yield of approximately 0.2% on its current stock price of ₹788.35. We love seeing companies pay a dividend, but it's also important to be sure that laying the golden eggs isn't going to kill our golden goose! As a result, readers should always check whether Lincoln Pharmaceuticals has been able to grow its dividends, or if the dividend might be cut.

View our latest analysis for Lincoln Pharmaceuticals

If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. Lincoln Pharmaceuticals paid out just 3.9% of its profit last year, which we think is conservatively low and leaves plenty of margin for unexpected circumstances. 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. The good news is it paid out just 13% of its free cash flow in the last year.

It's positive to see that Lincoln Pharmaceuticals'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 Lincoln Pharmaceuticals 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 Lincoln Pharmaceuticals's earnings per share have risen 15% per annum over the last five years. Earnings per share have been growing rapidly and the company is retaining a majority of its earnings within the business. This will make it easier to fund future growth efforts and we think this is an attractive combination - plus the dividend can always be increased later.

The main way most investors will assess a company's dividend prospects is by checking the historical rate of dividend growth. In the last 10 years, Lincoln Pharmaceuticals has lifted its dividend by approximately 12% a year on average. It's exciting to see that both earnings and dividends per share have grown rapidly over the past few years.

The Bottom Line

Is Lincoln Pharmaceuticals worth buying for its dividend? Lincoln Pharmaceuticals has been growing earnings at a rapid rate, and has a conservatively low payout ratio, implying that it is reinvesting heavily in its business; a sterling combination. Lincoln Pharmaceuticals looks solid on this analysis overall, and we'd definitely consider investigating it more closely.

Curious about whether Lincoln Pharmaceuticals has been able to consistently generate growth? Here's a chart of its historical revenue and earnings growth.

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.