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Career Point Limited (NSE:CAREERP) stock is about to trade ex-dividend in 1 days time. This means that investors who purchase shares on or after the 21st of August will not receive the dividend, which will be paid on the 6th of September.
Career Point's upcoming dividend is ₹1.00 a share, following on from the last 12 months, when the company distributed a total of ₹2.00 per share to shareholders. Based on the last year's worth of payments, Career Point has a trailing yield of 3.0% on the current stock price of ₹66.3. We love seeing companies pay a dividend, but it's also important to be sure that laying the golden eggs isn't going to kill our golden goose! So we need to check whether the dividend payments are covered, and if earnings are growing.
See our latest analysis for Career Point
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.
Click here to see how much of its profit Career Point paid out over the last 12 months.
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 earnings decline and the company is forced to cut its dividend, investors could watch the value of their investment go up in smoke. That's why it's comforting to see Career Point's earnings have been skyrocketing, up 22% per annum for the past five years. Career Point is paying out less than half its earnings and cash flow, while simultaneously growing earnings per share at a rapid clip. Companies with growing earnings and low payout ratios are often the best long-term dividend stocks, as the company can both grow its earnings and increase the percentage of earnings that it pays out, essentially multiplying the dividend.
Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. It looks like the Career Point dividends are largely the same as they were five years ago.
To Sum It Up
Is Career Point worth buying for its dividend? Career Point has grown its earnings per share while simultaneously reinvesting in the business. Unfortunately it's cut the dividend at least once in the past five years, but the conservative payout ratio makes the current dividend look sustainable. It's a promising combination that should mark this company worthy of closer attention.
Want to learn more about Career Point? Here's a visualisation of its historical rate of revenue and earnings growth.