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It looks like Gulshan Polyols Limited (NSE:GULPOLY) is about to go ex-dividend in the next 3 days. Investors can purchase shares before the 12th of September in order to be eligible for this dividend, which will be paid on the 21st of October.
Gulshan Polyols's upcoming dividend is ₹0.30 a share, following on from the last 12 months, when the company distributed a total of ₹0.70 per share to shareholders. Last year's total dividend payments show that Gulshan Polyols has a trailing yield of 1.6% on the current share price of ₹45.4. Dividends are an important source of income to many shareholders, but the health of the business is crucial to maintaining those dividends. That's why we should always check whether the dividend payments appear sustainable, and if the company is growing.
View our latest analysis for Gulshan Polyols
Dividends are usually paid out of company profits, so if a company pays out more than it earned then its dividend is usually at greater risk of being cut. Gulshan Polyols is paying out just 15% of its profit after tax, which is comfortably low and leaves plenty of breathing room in the case of adverse events.
Click here to see how much of its profit Gulshan Polyols 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 decline and the company is forced to cut its dividend, investors could watch the value of their investment go up in smoke. Readers will understand then, why we're concerned to see Gulshan Polyols's earnings per share have dropped 5.2% a year over the past five years. Ultimately, when earnings per share decline, the size of the pie from which dividends can be paid, shrinks.
The main way most investors will assess a company's dividend prospects is by checking the historical rate of dividend growth. In the past 10 years, Gulshan Polyols has increased its dividend at approximately 13% a year on average.
The Bottom Line
Is Gulshan Polyols an attractive dividend stock, or better left on the shelf? Gulshan Polyols has comfortably low cash and profit payout ratios, which may mean the dividend is sustainable even in the face of a sharp decline in earnings per share. Still, we consider declining earnings to be a warning sign. Overall, it's not a bad combination, but we feel that there are likely more attractive dividend prospects out there.
Want to learn more about Gulshan Polyols? Here's a visualisation of its historical rate of revenue and earnings growth.