In This Article:
It looks like Skipper Limited (NSE:SKIPPER) is about to go ex-dividend in the next 3 days. If you purchase the stock on or after the 2nd of August, you won't be eligible to receive this dividend, when it is paid on the 11th of September.
Skipper's next dividend payment will be ₹0.25 per share. Last year, in total, the company distributed ₹0.25 to shareholders. Calculating the last year's worth of payments shows that Skipper has a trailing yield of 0.5% on the current share price of ₹47.85. 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! As a result, readers should always check whether Skipper has been able to grow its dividends, or if the dividend might be cut.
View our latest analysis for Skipper
If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. Skipper is paying out just 8.2% of its profit after tax, which is comfortably low and leaves plenty of breathing room in the case of adverse events. 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. The good news is it paid out just 18% of its free cash flow in the last year.
It's positive to see that Skipper'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 the company's payout ratio, plus analyst estimates of its future dividends.
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 decline and the company is forced to cut its dividend, investors could watch the value of their investment go up in smoke. This is why it's a relief to see Skipper earnings per share are up 2.2% per annum over the last five years. Skipper is retaining more than three-quarters of its earnings and has a history of generating some growth in earnings. We think this is a reasonable combination.
Many investors will assess a company's dividend performance by evaluating how much the dividend payments have changed over time. Skipper has delivered 11% dividend growth per year on average over the past 5 years. It's encouraging to see the company lifting dividends while earnings are growing, suggesting at least some corporate interest in rewarding shareholders.