Public Joint Stock Company Novorossyisk Grain Plant (MCX:NKHP) Looks Like A Good Stock, And It's Going 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 Public Joint Stock Company Novorossyisk Grain Plant (MCX:NKHP) is about to go ex-dividend in just 3 days. This means that investors who purchase shares on or after the 13th of January will not receive the dividend, which will be paid on the 1st of January.

Novorossyisk Grain Plant's next dividend payment will be ₽10.92 per share. Last year, in total, the company distributed ₽24.75 to shareholders. Last year's total dividend payments show that Novorossyisk Grain Plant has a trailing yield of 5.3% on the current share price of RUB463. Dividends are an important source of income to many shareholders, but the health of the business is crucial to maintaining those dividends. As a result, readers should always check whether Novorossyisk Grain Plant has been able to grow its dividends, or if the dividend might be cut.

View our latest analysis for Novorossyisk Grain Plant

If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. That's why it's good to see Novorossyisk Grain Plant paying out a modest 34% of its earnings. That said, even highly profitable companies sometimes might not generate enough cash to pay the dividend, which is why we should always check if the dividend is covered by cash flow. It distributed 28% of its free cash flow as dividends, a comfortable payout level for most companies.

It's positive to see that Novorossyisk Grain Plant's dividend is covered by both profits and cash flow, since this is generally a sign that the dividend is sustainable, and a lower payout ratio usually suggests a greater margin of safety before the dividend gets cut.

Click here to see how much of its profit Novorossyisk Grain Plant paid out over the last 12 months.

Have Earnings And Dividends Been Growing?

Stocks with flat earnings can still be attractive dividend payers, but it is important to be more conservative with your approach and demand a greater margin for safety when it comes to dividend sustainability. If earnings fall far enough, the company could be forced to cut its dividend. That explains why we're not overly excited about Novorossyisk Grain Plant's flat earnings over the past five years. Better than seeing them fall off a cliff, for sure, but the best dividend stocks grow their earnings meaningfully over the long run. Recent earnings growth has been limited. Yet there are several ways to grow the dividend, and one of them is simply that the company may choose to pay out more of its earnings as dividends.

Many investors will assess a company's dividend performance by evaluating how much the dividend payments have changed over time. Novorossyisk Grain Plant's dividend payments per share have declined at 3.5% per year on average over the past five years, which is uninspiring.

The Bottom Line

From a dividend perspective, should investors buy or avoid Novorossyisk Grain Plant? The company has barely grown earnings per share over this time, but at least it's paying out a decently low percentage of its earnings and cashflow as dividends. This could suggest management is reinvesting in future growth opportunities. Generally we like to see both low payout ratios and strong earnings per share growth, but Novorossyisk Grain Plant is halfway there. It's a promising combination that should mark this company worthy of closer attention.

While it's tempting to invest in Novorossyisk Grain Plant for the dividends alone, you should always be mindful of the risks involved. To help with this, we've discovered 3 warning signs for Novorossyisk Grain Plant that you should be aware of before investing in their shares.

A common investment mistake is buying the first interesting stock you see. Here you can find a list of promising dividend stocks with a greater than 2% yield and an upcoming dividend.

When trading Novorossyisk Grain Plant or any other investment, use the platform considered by many to be the Professional's Gateway to the Worlds Market, Interactive Brokers. You get the lowest-cost* trading on stocks, options, futures, forex, bonds and funds worldwide from a single integrated account. Promoted

This article by Simply Wall St is general in nature. 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.
^*Interactive Brokers Rated Lowest Cost Broker by StockBrokers.com Annual Online Review 2020

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.