Adani Port and Special Economic Zone Limited (NSE:ADANIPORTS) will trade ex-dividend in the next three days. The ex-dividend date is one business day before the company’s record date, which is the date the company determines which shareholders are entitled to receive the dividend. The ex-dividend date is important because the settlement process takes two full business days. So if you miss that date, you won’t appear on the company’s books on the record date. This means investors who bought Adani Ports and Special Economic Zone shares on or after July 14 will not receive the dividend, which will be paid on August 25.
The company’s next dividend payout is ₹5.00 per share, and in the last 12 months, the company paid a total of ₹5.00 per share. Looking at the trailing 12-month distribution, Adani Ports and Special Economic Zones has a trailing yield of about 0.7% at its current share price of ₹715.7. If you are buying this business for its dividend, you should have an idea if Adani Port and Special Economic Zone dividends are reliable and sustainable. That is why we should always check if the dividend payout looks sustainable, and if the company is growing.
Check out our latest analysis for Adani Ports and Special Economic Zones
Dividends are usually paid out of a company’s profits, so if a company pays out more than it earns then its dividend is usually at greater risk of being cut. Adani Ports and Special Economic Zones pays out just 22% of its profits after tax, which is comfortably low and gives plenty of breathing room in the event of a bad turn. However, even very profitable companies may sometimes not generate enough cash to pay dividends, which is why we should always check if dividends are covered by cash flow. The good news is that it paid out just 17% of its free cash flow last year.
It is positive to see that the Adani Ports and Special Economic Zones dividend is covered by both profits and cash flow, as this is generally a sign that the dividend is sustainable, and a lower payout ratio usually indicates a greater margin of safety before the dividend is cut. .
Click here to see the company’s payout ratio, as well as analyst estimates for its future dividends.
Are Income And Dividends Growing?
Businesses with strong growth prospects usually make the best dividend payers, because it’s easier to grow dividends when earnings per share improve. If earnings fall far enough, the company could be forced to cut its dividend. That’s why it’s a relief to see Adani Ports and Special Economic Zone’s earnings per share grow by 3.5% per annum over the past five years. Adani Ports and Special Economic Zones retain more than three-quarters of its revenue and have a history of generating some growth in revenue. We think this is a reasonable combination.
The primary way most investors evaluate a company’s dividend prospects is to check the historical rate of dividend growth. In the past 10 years, Adani Ports and Special Economic Zones has raised its dividend by an average of about 17% per year. It’s encouraging to see companies raising dividends while earnings grow, suggesting at least some corporate interest in rewarding shareholders.
Bring Home Late
Is Adani Port and Special Economic Zone worth buying for its dividend? Earnings per share growth has grown modestly, and Adani Ports and Special Economic Zones pay out less than half of its earnings and cash flow as dividends. This is interesting for a number of reasons, as it suggests management may be reinvesting heavily in the business, but it also provides room to increase the dividend in time. We’d prefer to see earnings grow faster, but the best dividend stocks for the long term usually combine significant earnings per share growth with low payout ratios, and Adani Ports and Special Economic Zones already have half of that. Adani Ports and Special Economic Zones look strong on this analysis overall, and we will definitely consider investigating them more closely.
While it is attractive to invest in Adani Ports and Special Economic Zones for the dividends alone, you should always consider the risks involved. Our analysis shows 4 warning signs for Adani Port and Special Economic Zone and you should be aware of them before buying any stock.
If you’re in the market for a strong dividend payer, we recommend check out our top dividend stock picks.
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This article by Simply Wall St is general in nature. We provide reviews based on historical data and analyst forecasts using only an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any shares, and does not take into account 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 take into account recent price-sensitive company announcements or qualitative material. Simply Wall St has no position in any of the stocks mentioned.