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If you are interested in cashing in on Reliance Capital Limited’s (NSE:RELCAPITAL) upcoming dividend of ₹11.00 per share, you only have 4 days left to buy the shares before its ex-dividend date, 12 September 2018, in time for dividends payable on the 18 October 2018. Should you diversify into Reliance Capital and boost your portfolio income stream? Well, keep on reading because today, I’m going to look at the latest data and analyze the stock and its dividend property in further detail.

View our latest analysis for Reliance Capital

How I analyze a dividend stock

When assessing a stock as a potential addition to my dividend Portfolio, I look at these five areas:

• Is it paying an annual yield above 75% of dividend payers?

• Has it paid dividend every year without dramatically reducing payout in the past?

• Has dividend per share risen in the past couple of years?

• Is its earnings sufficient to payout dividend at the current rate?

• Will it have the ability to keep paying its dividends going forward?

Does Reliance Capital pass our checks?

The company currently pays out 21.2% of its earnings as a dividend, according to its trailing twelve-month data, which means that the dividend is covered by earnings. Furthermore, analysts have not forecasted a dividends per share for the future, which makes it hard to determine the yield shareholders should expect, and whether the current payout is sustainable, moving forward.

When thinking about whether a dividend is sustainable, another factor to consider is the cash flow. A company with strong cash flow, relative to earnings, can sometimes sustain a high pay out ratio.

Reliablity is an important factor for dividend stocks, particularly for income investors who want a strong track record of payment and a positive outlook for future payout. RELCAPITAL has increased its DPS from ₹5.5 to ₹11 in the past 10 years. It has also been paying out dividend consistently during this time, as you’d expect for a company increasing its dividend levels. This is an impressive feat, which makes RELCAPITAL a true dividend rockstar.

Compared to its peers, Reliance Capital produces a yield of 2.4%, which is on the low-side for Diversified Financial stocks.

Next Steps:

With this in mind, I definitely rank Reliance Capital as a strong dividend stock, and makes it worth further research for anyone who likes steady income generation from their portfolio. Given that this is purely a dividend analysis, you should always research extensively before deciding whether or not a stock is an appropriate investment for you. I always recommend analysing the company’s fundamentals and underlying business before making an investment decision. There are three relevant factors you should look at: