It looks like Jeena Sikho Lifecare Limited (NSE:JSLL) is about to go ex-dividend in the next three days. The ex-dividend date generally occurs two days 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 of consequence because whenever a stock is bought or sold, the trade can take two business days or more to settle. Thus, you can purchase Jeena Sikho Lifecare's shares before the 21st of September in order to receive the dividend, which the company will pay on the 28th of October.
The company's next dividend payment will be ₹4.50 per share. Last year, in total, the company distributed ₹4.50 to shareholders. Last year's total dividend payments show that Jeena Sikho Lifecare has a trailing yield of 0.9% on the current share price of ₹497.05. Dividends are a major contributor to investment returns for long term holders, but only if the dividend continues to be paid. So we need to check whether the dividend payments are covered, and if earnings are growing.
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. Jeena Sikho Lifecare paid out a comfortable 25% of its profit last year. A useful secondary check can be to evaluate whether Jeena Sikho Lifecare generated enough free cash flow to afford its dividend. What's good is that dividends were well covered by free cash flow, with the company paying out 6.2% of its 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.
Check out our latest analysis for Jeena Sikho Lifecare
Click here to see how much of its profit Jeena Sikho Lifecare 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 fall far enough, the company could be forced to cut its dividend. That's why it's comforting to see Jeena Sikho Lifecare's earnings have been skyrocketing, up 76% per annum for the past five years. Jeena Sikho Lifecare is paying out less than half its earnings and cash flow, while simultaneously growing earnings per share at a rapid clip. This is a very favourable combination that can often lead to the dividend multiplying over the long term, if earnings grow and the company pays out a higher percentage of its earnings.
Many investors will assess a company's dividend performance by evaluating how much the dividend payments have changed over time. In the past three years, Jeena Sikho Lifecare has increased its dividend at approximately 173% 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.
The Bottom Line
From a dividend perspective, should investors buy or avoid Jeena Sikho Lifecare? Jeena Sikho Lifecare has been growing earnings at a rapid rate, and has a conservatively low payout ratio, implying that it is reinvesting heavily in its business; a sterling combination. Jeena Sikho Lifecare looks solid on this analysis overall, and we'd definitely consider investigating it more closely.
Want to learn more about Jeena Sikho Lifecare? Here's a visualisation of its historical rate of revenue and earnings growth.
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.