Is It Worth Considering Ksolves India Limited (NSE:KSOLVES) For Its Upcoming Dividend?

Some investors rely on dividends for growing their wealth, and if you're one of those dividend sleuths, you might be intrigued to know that Ksolves India Limited (NSE:KSOLVES) is about to go ex-dividend in just 2 days. The ex-dividend date is commonly two business days before the record date, which is the cut-off date for shareholders to be present on the company's books to be eligible for a dividend payment. 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. Meaning, you will need to purchase Ksolves India's shares before the 25th of March to receive the dividend, which will be paid on the 18th of April.

The company's next dividend payment will be ₹7.50 per share, and in the last 12 months, the company paid a total of ₹10.50 per share. Looking at the last 12 months of distributions, Ksolves India has a trailing yield of approximately 2.3% on its current stock price of ₹453.00. If you buy this business for its dividend, you should have an idea of whether Ksolves India's dividend is reliable and sustainable. As a result, readers should always check whether Ksolves India has been able to grow its dividends, or if the dividend might be cut.

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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. Ksolves India paid out 66% of its earnings to investors last year, a normal payout level for most businesses. A useful secondary check can be to evaluate whether Ksolves India generated enough free cash flow to afford its dividend. Over the last year, it paid out more than three-quarters (87%) of its free cash flow generated, which is fairly high and may be starting to limit reinvestment in the business.

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.

See our latest analysis for Ksolves India

Click here to see how much of its profit Ksolves India 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. That's why it's comforting to see Ksolves India's earnings have been skyrocketing, up 52% per annum for the past five years.

Many investors will assess a company's dividend performance by evaluating how much the dividend payments have changed over time. Ksolves India has delivered an average of 70% per year annual increase in its dividend, based on the past four years of dividend payments. It's exciting to see that both earnings and dividends per share have grown rapidly over the past few years.

To Sum It Up

Has Ksolves India got what it takes to maintain its dividend payments? It's good to see earnings are growing, since all of the best dividend stocks grow their earnings meaningfully over the long run. That's why we're glad to see Ksolves India's earnings per share growing, although as we saw, the company is paying out more than half of its earnings and cashflow - 66% and 87% respectively. In summary, while it has some positive characteristics, we're not inclined to race out and buy Ksolves India today.

So while Ksolves India looks good from a dividend perspective, it's always worthwhile being up to date with the risks involved in this stock. For example - Ksolves India has 2 warning signs we think you should be aware of.

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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.