Patel Integrated Logistics Limited (NSE:PATINTLOG) Goes Ex-Dividend Soon

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 Patel Integrated Logistics Limited (NSE:PATINTLOG) is about to go ex-dividend in just 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 Patel Integrated Logistics' shares before the 13th of August in order to receive the dividend, which the company will pay on the 19th of September.

The company's next dividend payment will be ₹0.10 per share. Last year, in total, the company distributed ₹0.10 to shareholders. Calculating the last year's worth of payments shows that Patel Integrated Logistics has a trailing yield of 0.4% on the current share price of ₹24.07. If you buy this business for its dividend, you should have an idea of whether Patel Integrated Logistics's dividend is reliable and sustainable. As a result, readers should always check whether Patel Integrated Logistics has been able to grow its dividends, or if the dividend might be cut.

Check out our latest analysis for Patel Integrated Logistics

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. Patel Integrated Logistics has a low and conservative payout ratio of just 12% of its income after tax. A useful secondary check can be to evaluate whether Patel Integrated Logistics generated enough free cash flow to afford its dividend. Luckily it paid out just 6.5% of its free 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 how much of its profit Patel Integrated Logistics paid out over the last 12 months.

Have Earnings And Dividends Been Growing?

Companies with falling earnings are riskier for dividend shareholders. If business enters a downturn and the dividend is cut, the company could see its value fall precipitously. With that in mind, we're discomforted by Patel Integrated Logistics's 25% per annum decline in earnings in the past five years. Ultimately, when earnings per share decline, the size of the pie from which dividends can be paid, shrinks.

Patel Integrated Logistics also issued more than 5% of its market cap in new stock during the past year, which we feel is likely to hurt its dividend prospects in the long run. Trying to grow the dividend while issuing large amounts of new shares reminds us of the ancient Greek tale of Sisyphus - perpetually pushing a boulder uphill.

The main way most investors will assess a company's dividend prospects is by checking the historical rate of dividend growth. Patel Integrated Logistics's dividend payments per share have declined at 15% per year on average over the past 10 years, which is uninspiring. While it's not great that earnings and dividends per share have fallen in recent years, we're encouraged by the fact that management has trimmed the dividend rather than risk over-committing the company in a risky attempt to maintain yields to shareholders.

To Sum It Up

From a dividend perspective, should investors buy or avoid Patel Integrated Logistics? Earnings per share are down meaningfully, although at least the company is paying out a low and conservative percentage of both its earnings and cash flow. It's definitely not great to see earnings falling, but at least there may be some buffer before the dividend needs to be cut. To summarise, Patel Integrated Logistics looks okay on this analysis, although it doesn't appear a stand-out opportunity.

In light of that, while Patel Integrated Logistics has an appealing dividend, it's worth knowing the risks involved with this stock. We've identified 5 warning signs with Patel Integrated Logistics (at least 1 which is significant), and understanding these should be part of your investment process.

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.