Central Depository Services (India) Limited (NSE:CDSL) stock is about to trade ex-dividend in three days. The ex-dividend date is usually set to be two business days before the record date, which is the cut-off date on which you must be present on the company's books as a shareholder in order to receive the dividend. The ex-dividend date is important as the process of settlement involves at least two full business days. So if you miss that date, you would not show up on the company's books on the record date. Meaning, you will need to purchase Central Depository Services (India)'s shares before the 17th of July to receive the dividend, which will be paid on the 29th of August.
The company's next dividend payment will be ₹12.75 per share, on the back of last year when the company paid a total of ₹12.75 to shareholders. Based on the last year's worth of payments, Central Depository Services (India) stock has a trailing yield of around 0.9% on the current share price of ₹1431.90. If you buy this business for its dividend, you should have an idea of whether Central Depository Services (India)'s dividend is reliable and sustainable. As a result, readers should always check whether Central Depository Services (India) has been able to grow its dividends, or if the dividend might be cut.
Dividends are typically paid from company earnings. If a company pays more in dividends than it earned in profit, then the dividend could be unsustainable. Central Depository Services (India) paid out more than half (58%) of its earnings last year, which is a regular payout ratio for most companies.
When a company paid out less in dividends than it earned in profit, this generally suggests its dividend is affordable. The lower the % of its profit that it pays out, the greater the margin of safety for the dividend if the business enters a downturn.
See our latest analysis for Central Depository Services (India)
Click here to see the company's payout ratio, plus analyst estimates of its future dividends.
Have Earnings And Dividends Been Growing?
Businesses with strong growth prospects usually make the best dividend payers, because it's easier to grow dividends when earnings per share are improving. If business enters a downturn and the dividend is cut, the company could see its value fall precipitously. For this reason, we're glad to see Central Depository Services (India)'s earnings per share have risen 18% per annum over the last 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, eight years ago, Central Depository Services (India) has lifted its dividend by approximately 28% 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
From a dividend perspective, should investors buy or avoid Central Depository Services (India)? Central Depository Services (India) has an acceptable payout ratio and its earnings per share have been improving at a decent rate. Overall, Central Depository Services (India) looks like a promising dividend stock in this analysis, and we think it would be worth investigating further.
Curious what other investors think of Central Depository Services (India)? See what analysts are forecasting, with this visualisation of its historical and future estimated earnings and cash flow.
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.