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Thirumalai Chemicals Limited (NSE:TIRUMALCHM) stock is about to trade ex-dividend in 3 days time. You can purchase shares before the 17th of July in order to receive the dividend, which the company will pay on the 24th of August.
Thirumalai Chemicals's upcoming dividend is ₹2.00 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, Thirumalai Chemicals stock has a trailing yield of around 2.7% on the current share price of ₹73.85. If you buy this business for its dividend, you should have an idea of whether Thirumalai Chemicals's dividend is reliable and sustainable. That's why we should always check whether the dividend payments appear sustainable, and if the company is growing.
Check out our latest analysis for Thirumalai Chemicals
If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. Thirumalai Chemicals paid out just 18% of its profit last year, which we think is conservatively low and leaves plenty of margin for unexpected circumstances. A useful secondary check can be to evaluate whether Thirumalai Chemicals generated enough free cash flow to afford its dividend. Over the last year it paid out 50% of its free cash flow as dividends, within the usual range for most companies.
It's positive to see that Thirumalai Chemicals'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 Thirumalai Chemicals 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 Thirumalai Chemicals's earnings have been skyrocketing, up 57% per annum for the past five years.
The main way most investors will assess a company's dividend prospects is by checking the historical rate of dividend growth. In the last 10 years, Thirumalai Chemicals has lifted its dividend by approximately 7.2% a year on average. It's encouraging to see the company lifting dividends while earnings are growing, suggesting at least some corporate interest in rewarding shareholders.