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It looks like CL Educate Limited (NSE:CLEDUCATE) is about to go ex-dividend in the next 3 days. Investors can purchase shares before the 22nd of November in order to be eligible for this dividend, which will be paid on the 12th of December.
CL Educate'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 CL Educate has a trailing yield of 1.3% on the current share price of ₹77. If you buy this business for its dividend, you should have an idea of whether CL Educate's dividend is reliable and sustainable. So we need to investigate whether CL Educate can afford its dividend, and if the dividend could grow.
Check out our latest analysis for CL Educate
If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. 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. Luckily it paid out just 22% of its free cash flow last year.
Click here to see how much of its profit CL Educate paid out over the last 12 months.
Have Earnings And Dividends Been Growing?
Businesses with shrinking earnings are tricky from a dividend perspective. If business enters a downturn and the dividend is cut, the company could see its value fall precipitously. So we're not too excited that CL Educate's earnings are down 4.5% a year over the past five years.
Unfortunately CL Educate has only been paying a dividend for a year or so, so there's not much of a history to draw insight from.
Final Takeaway
Should investors buy CL Educate for the upcoming dividend? CL Educate 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 we're not hugely bearish on the stock, but there are likely better dividend investments out there.
Keen to explore more data on CL Educate's financial performance? Check out our visualisation of its historical revenue and earnings growth.
A common investment mistake is buying the first interesting stock you see. Here you can find a list of promising dividend stocks with a greater than 2% yield and an upcoming dividend.
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If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.