Should You Buy Oberoi Realty Limited (NSE:OBEROIRLTY) For Its Upcoming Dividend?

Oberoi Realty Limited (NSE:OBEROIRLTY) stock is about to trade ex-dividend in 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. 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. In other words, investors can purchase Oberoi Realty's shares before the 4th of November in order to be eligible for the dividend, which will be paid on the 17th of November.

The company's next dividend payment will be ₹2.00 per share, on the back of last year when the company paid a total of ₹8.00 to shareholders. Last year's total dividend payments show that Oberoi Realty has a trailing yield of 0.4% on the current share price of ₹1927.75. If you buy this business for its dividend, you should have an idea of whether Oberoi Realty's dividend is reliable and sustainable. As a result, readers should always check whether Oberoi Realty has been able to grow its dividends, or if the dividend might be cut.

Check out our latest analysis for Oberoi Realty

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. Oberoi Realty has a low and conservative payout ratio of just 19% of its income after tax. Yet cash flow is typically more important than profit for assessing dividend sustainability, so we should always check if the company generated enough cash to afford its dividend. What's good is that dividends were well covered by free cash flow, with the company paying out 16% of its cash flow last year.

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 the company's payout ratio, plus analyst estimates of its future dividends.

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. Investors love dividends, so if earnings fall and the dividend is reduced, expect a stock to be sold off heavily at the same time. That's why it's comforting to see Oberoi Realty's earnings have been skyrocketing, up 23% per annum for the past five years. Oberoi Realty looks like a real growth company, with earnings per share growing at a cracking pace and the company reinvesting most of its profits in the business.

Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. Since the start of our data, 10 years ago, Oberoi Realty has lifted its dividend by approximately 15% a year on average. It's great to see earnings per share growing rapidly over several years, and dividends per share growing right along with it.

Final Takeaway

Should investors buy Oberoi Realty for the upcoming dividend? It's great that Oberoi 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. There's a lot to like about Oberoi Realty, and we would prioritise taking a closer look at it.

On that note, you'll want to research what risks Oberoi Realty is facing. Case in point: We've spotted 1 warning sign for Oberoi Realty you should be aware of.

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.