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Procter & Gamble Hygiene and Health Care Limited (NSE:PGHH) is about to trade ex-dividend in the next 3 days. Ex-dividend means that investors that purchase the stock on or after the 19th of November will not receive this dividend, which will be paid on the 20th of December.
Procter & Gamble Hygiene and Health Care's next dividend payment will be ₹48.00 per share, and in the last 12 months, the company paid a total of ₹96.00 per share. Based on the last year's worth of payments, Procter & Gamble Hygiene and Health Care has a trailing yield of 0.9% on the current stock price of ₹10988.4. If you buy this business for its dividend, you should have an idea of whether Procter & Gamble Hygiene and Health Care'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.
See our latest analysis for Procter & Gamble Hygiene and Health Care
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. Procter & Gamble Hygiene and Health Care paid out 69% of its earnings to investors last year, a normal payout level for most businesses. That said, even highly profitable companies sometimes might not generate enough cash to pay the dividend, which is why we should always check if the dividend is covered by cash flow. It paid out more than half (66%) of its free cash flow in the past year, which is within an average range for most companies.
It's positive to see that Procter & Gamble Hygiene and Health Care'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.
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. Investors love dividends, so if earnings fall and the dividend is reduced, expect a stock to be sold off heavily at the same time. This is why it's a relief to see Procter & Gamble Hygiene and Health Care earnings per share are up 6.4% per annum over the last five years. While earnings have been growing at a credible rate, the company is paying out a majority of its earnings to shareholders. Therefore it's unlikely that the company will be able to reinvest heavily in its business, which could presage slower growth in the future.