Be Sure To Check Out Radhika Jeweltech Limited (NSE:RADHIKAJWE) Before It Goes Ex-Dividend

It looks like Radhika Jeweltech Limited (NSE:RADHIKAJWE) is about to go ex-dividend in the next three days. 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. In other words, investors can purchase Radhika Jeweltech's shares before the 23rd of September in order to be eligible for the dividend, which will be paid on the 30th of October.

The company's upcoming dividend is ₹0.20 a share, following on from the last 12 months, when the company distributed a total of ₹0.20 per share to shareholders. Last year's total dividend payments show that Radhika Jeweltech has a trailing yield of 0.2% on the current share price of ₹125.10. Dividends are an important source of income to many shareholders, but the health of the business is crucial to maintaining those dividends. So we need to check whether the dividend payments are covered, and if earnings are growing.

See our latest analysis for Radhika Jeweltech

If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. Radhika Jeweltech paid out just 4.8% of its profit last year, which we think is conservatively low and leaves plenty of margin for unexpected circumstances. Radhika Jeweltech paid a dividend despite reporting negative free cash flow last year. That's typically a bad combination and - if this were more than a one-off - not sustainable.

Click here to see how much of its profit Radhika Jeweltech 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. If earnings decline and the company is forced to cut its dividend, investors could watch the value of their investment go up in smoke. It's encouraging to see Radhika Jeweltech has grown its earnings rapidly, up 42% a year for the past five years.

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, five years ago, Radhika Jeweltech 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

Has Radhika Jeweltech got what it takes to maintain its dividend payments? Companies like Radhika Jeweltech that are growing rapidly and paying out a low fraction of earnings, are usually reinvesting heavily in their business. This is one of the most attractive investment combinations under this analysis, as it can create substantial value for investors over the long run. In summary, Radhika Jeweltech appears to have some promise as a dividend stock, and we'd suggest taking a closer look at it.

So while Radhika Jeweltech looks good from a dividend perspective, it's always worthwhile being up to date with the risks involved in this stock. In terms of investment risks, we've identified 1 warning sign with Radhika Jeweltech and understanding them should be part of your investment process.

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.