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JTEKT India Limited (NSE:JTEKTINDIA) stock is about to trade ex-dividend in 3 days time. You can purchase shares before the 1st of August in order to receive the dividend, which the company will pay on the 8th of September.
JTEKT India's next dividend payment will be ₹0.80 per share, on the back of last year when the company paid a total of ₹0.80 to shareholders. Based on the last year's worth of payments, JTEKT India stock has a trailing yield of around 1.0% on the current share price of ₹76.8. Dividends are an important source of income to many shareholders, but the health of the business is crucial to maintaining those dividends. As a result, readers should always check whether JTEKT India has been able to grow its dividends, or if the dividend might be cut.
See our latest analysis for JTEKT India
If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. That's why it's good to see JTEKT India paying out a modest 27% of its earnings. Yet cash flow is typically more important than profit for assessing dividend sustainability, so we should always check if the company generated enough cash to afford its dividend. It paid out 25% of its free cash flow as dividends last year, which is conservatively low.
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.
Click here to see how much of its profit JTEKT India paid out over the last 12 months.
Have Earnings And Dividends Been Growing?
When earnings decline, dividend companies become much harder to analyse and own safely. If business enters a downturn and the dividend is cut, the company could see its value fall precipitously. So we're not too excited that JTEKT India's earnings are down 2.7% a year over 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 past 9 years, JTEKT India has increased its dividend at approximately 12% a year on average.
To Sum It Up
Should investors buy JTEKT India for the upcoming dividend? Earnings per share are down meaningfully, although at least the company is paying out a low and conservative percentage of both its earnings and cash flow. It's definitely not great to see earnings falling, but at least there may be some buffer before the dividend needs to be cut. Overall we're not hugely bearish on the stock, but there are likely better dividend investments out there.