Why You Might Be Interested In Marathon Nextgen Realty Limited (NSE:MARATHON) For Its Upcoming Dividend

It looks like Marathon Nextgen Realty Limited (NSE:MARATHON) is about to go ex-dividend in the next three 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. The ex-dividend date is important because any transaction on a stock needs to have been settled before the record date in order to be eligible for a dividend. Thus, you can purchase Marathon Nextgen Realty's shares before the 18th of September in order to receive the dividend, which the company will pay on the 2nd of October.

The company's next dividend payment will be ₹1.00 per share, on the back of last year when the company paid a total of ₹1.00 to shareholders. Last year's total dividend payments show that Marathon Nextgen Realty has a trailing yield of 0.2% on the current share price of ₹428.5. If you buy this business for its dividend, you should have an idea of whether Marathon Nextgen Realty's dividend is reliable and sustainable. That's why we should always check whether the dividend payments appear sustainable, and if the company is growing.

Check out our latest analysis for Marathon Nextgen Realty

If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. Marathon Nextgen Realty is paying out just 3.8% of its profit after tax, which is comfortably low and leaves plenty of breathing room in the case of adverse events. A useful secondary check can be to evaluate whether Marathon Nextgen Realty generated enough free cash flow to afford its dividend. It paid out 0.6% of its free cash flow as dividends last year, which is conservatively low.

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 Marathon Nextgen Realty 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. Investors love dividends, so if earnings fall and the dividend is reduced, expect a stock to be sold off heavily at the same time. It's encouraging to see Marathon Nextgen Realty has grown its earnings rapidly, up 32% a year for the past five years. With earnings per share growing rapidly and the company sensibly reinvesting almost all of its profits within the business, Marathon Nextgen Realty looks like a promising growth company.

Many investors will assess a company's dividend performance by evaluating how much the dividend payments have changed over time. Marathon Nextgen Realty's dividend payments per share have declined at 4.0% per year on average over the past 10 years, which is uninspiring. Marathon Nextgen Realty is a rare case where dividends have been decreasing at the same time as earnings per share have been improving. It's unusual to see, and could point to unstable conditions in the core business, or more rarely an intensified focus on reinvesting profits.

Final Takeaway

From a dividend perspective, should investors buy or avoid Marathon Nextgen Realty? It's great that Marathon Nextgen Realty is growing earnings per share while simultaneously paying out a low percentage of both its earnings and cash flow. It's disappointing to see the dividend has been cut at least once in the past, but as things stand now, the low payout ratio suggests a conservative approach to dividends, which we like. Marathon Nextgen Realty looks solid on this analysis overall, and we'd definitely consider investigating it more closely.

In light of that, while Marathon Nextgen Realty has an appealing dividend, it's worth knowing the risks involved with this stock. Case in point: We've spotted 1 warning sign for Marathon Nextgen Realty you should be aware of.

A common investing mistake is buying the first interesting stock you see. Here you can find a full list of high-yield 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.