There's A Lot To Like About Eldeco Housing and Industries' (NSE:ELDEHSG) Upcoming ₹8.00 Dividend

Regular readers will know that we love our dividends at Simply Wall St, which is why it's exciting to see Eldeco Housing and Industries Limited (NSE:ELDEHSG) is about to trade ex-dividend in the next 3 days. The ex-dividend date occurs one day 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. It is important to be aware of the ex-dividend date because any trade on the stock needs to have been settled on or before the record date. Therefore, if you purchase Eldeco Housing and Industries' shares on or after the 15th of September, you won't be eligible to receive the dividend, when it is paid on the 22nd of October.

The company's upcoming dividend is ₹8.00 a share, following on from the last 12 months, when the company distributed a total of ₹8.00 per share to shareholders. Calculating the last year's worth of payments shows that Eldeco Housing and Industries has a trailing yield of 1.1% on the current share price of ₹723.5. 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 Eldeco Housing and Industries has been able to grow its dividends, or if the dividend might be cut.

Check out our latest analysis for Eldeco Housing and Industries

Dividends are usually paid out of company profits, so if a company pays out more than it earned then its dividend is usually at greater risk of being cut. Eldeco Housing and Industries paid out just 18% 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. It paid out more than half (58%) 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 Eldeco Housing and Industries 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 earnings fall far enough, the company could be forced to cut its dividend. For this reason, we're glad to see Eldeco Housing and Industries's earnings per share have risen 12% per annum over the last five years. Eldeco Housing and Industries has an average payout ratio which suggests a balance between growing earnings and rewarding shareholders. 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. Eldeco Housing and Industries has delivered an average of 17% per year annual increase in its dividend, based on the past 10 years of dividend payments. It's exciting to see that both earnings and dividends per share have grown rapidly over the past few years.

Final Takeaway

Is Eldeco Housing and Industries an attractive dividend stock, or better left on the shelf? Earnings per share have grown at a nice rate in recent times and over the last year, Eldeco Housing and Industries paid out less than half its earnings and a bit over half its free cash flow. There's a lot to like about Eldeco Housing and Industries, and we would prioritise taking a closer look at it.

On that note, you'll want to research what risks Eldeco Housing and Industries is facing. Case in point: We've spotted 3 warning signs for Eldeco Housing and Industries 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.