Regular readers will know that we love our dividends at Simply Wall St, which is why it's exciting to see N R Agarwal Industries Limited (NSE:NRAGRINDQ) is about to trade ex-dividend in the next 3 days. This means that investors who purchase shares on or after the 6th of September will not receive the dividend, which will be paid on the 16th of October.
N R Agarwal Industries's next dividend payment will be ₹4.00 per share. Last year, in total, the company distributed ₹4.00 to shareholders. Based on the last year's worth of payments, N R Agarwal Industries stock has a trailing yield of around 1.9% on the current share price of ₹216.6. If you buy this business for its dividend, you should have an idea of whether N R Agarwal Industries's dividend is reliable and sustainable. As a result, readers should always check whether N R Agarwal Industries has been able to grow its dividends, or if the dividend might be cut.
See our latest analysis for N R Agarwal Industries
Dividends are typically paid out of company income, so if a company pays out more than it earned, its dividend is usually at a higher risk of being cut. N R Agarwal Industries has a low and conservative payout ratio of just 7.6% of its income after tax. 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. Luckily it paid out just 5.7% of its free cash flow last year.
It's positive to see that N R Agarwal Industries'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 how much of its profit N R Agarwal Industries paid out over the last 12 months.
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 business enters a downturn and the dividend is cut, the company could see its value fall precipitously. That's why it's comforting to see N R Agarwal Industries's earnings have been skyrocketing, up 188% per annum for the past five years. N R Agarwal Industries earnings per share have been sprinting ahead like the Road Runner at a track and field day; scarcely stopping even for a cheeky "beep-beep". We also like that it is reinvesting most of its profits in its business.