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Mindteck (India) Limited (NSE:MINDTECK) stock is about to trade ex-dividend in 3 days time. You can purchase shares before the 6th of August in order to receive the dividend, which the company will pay on the 13th of September.
Mindteck (India)'s upcoming dividend is ₹1.00 a share, following on from the last 12 months, when the company distributed a total of ₹1.00 per share to shareholders. Calculating the last year's worth of payments shows that Mindteck (India) has a trailing yield of 2.8% on the current share price of ₹36. If you buy this business for its dividend, you should have an idea of whether Mindteck (India)'s dividend is reliable and sustainable. So we need to check whether the dividend payments are covered, and if earnings are growing.
View our latest analysis for Mindteck (India)
If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. Last year Mindteck (India) paid out 92% of its profits as dividends to shareholders, suggesting the dividend is not well covered by earnings.
Click here to see how much of its profit Mindteck (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 earnings fall far enough, the company could be forced to cut its dividend. Mindteck (India)'s earnings per share have plummeted approximately 32% a year over the previous five years.
The main way most investors will assess a company's dividend prospects is by checking the historical rate of dividend growth. Mindteck (India)'s dividend payments are effectively flat on where they were five years ago. If a company's dividend stays flat while earnings are in decline, this is typically a sign that it is paying out a larger percentage of its earnings. This can become unsustainable if earnings fall far enough.
To Sum It Up
Has Mindteck (India) got what it takes to maintain its dividend payments? It's never great to see earnings per share declining, especially when a company is paying out 92% of its profit as dividends, which we feel is uncomfortably high. However, the cash payout ratio was much lower - good news from a dividend perspective - which makes us wonder why there is such a mis-match between income and cashflow. It's not an attractive combination from a dividend perspective, and we're inclined to pass on this one for the time being.
Keen to explore more data on Mindteck (India)'s financial performance? Check out our visualisation of its historical revenue and earnings growth.