Why You Might Be Interested In Morepen Laboratories Limited (NSE:MOREPENLAB) For Its Upcoming Dividend

Morepen Laboratories Limited (NSE:MOREPENLAB) stock is about to trade ex-dividend in three days. The ex-dividend date generally occurs two days before the record date, which is the day on which shareholders need to be on the company's books in order to receive a dividend. 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. Meaning, you will need to purchase Morepen Laboratories' shares before the 29th of August to receive the dividend, which will be paid on the 6th of October.

The upcoming dividend for Morepen Laboratories will put a total of ₹0.20 per share in shareholders' pockets. Dividends are a major contributor to investment returns for long term holders, but only if the dividend continues to be paid. We need to see whether the dividend is covered by earnings and if it's growing.

We've found 21 US stocks that are forecast to pay a dividend yield of over 6% next year. See the full list for free.

Dividends are typically paid out of company income, so if a company pays out more than it earned, its dividend is usually at a higher risk of being cut. Morepen Laboratories paid out just 9.1% of its profit last year, which we think is conservatively low and leaves plenty of margin for unexpected circumstances.

Check out our latest analysis for Morepen Laboratories

Click here to see how much of its profit Morepen Laboratories 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 earnings fall far enough, the company could be forced to cut its dividend. For this reason, we're glad to see Morepen Laboratories's earnings per share have risen 18% per annum over the last five years.

Morepen Laboratories also issued more than 5% of its market cap in new stock during the past year, which we feel is likely to hurt its dividend prospects in the long run. It's hard to grow dividends per share when a company keeps creating new shares.

This is Morepen Laboratories's first year of paying a regular dividend, so it doesn't have much of a history yet to compare to.

The Bottom Line

Is Morepen Laboratories worth buying for its dividend? Typically, companies that are growing rapidly and paying out a low fraction of earnings are keeping the profits for reinvestment in the business. This strategy can add significant value to shareholders over the long term - as long as it's done without issuing too many new shares. Overall, Morepen Laboratories looks like a promising dividend stock in this analysis, and we think it would be worth investigating further.

On that note, you'll want to research what risks Morepen Laboratories is facing. For example - Morepen Laboratories has 1 warning sign we think you should be aware of.

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.