Happiest Minds Technologies Limited (NSE:HAPPSTMNDS) Passed Our Checks, And It's About To Pay A ₹2.00 Dividend – Simply Wall St
Happiest Minds Technologies Limited (NSE:HAPPSTMNDS) is about to trade ex-dividend in the next 3 days. Typically, the ex-dividend date is one business day before the record date which is the date on which a company determines the shareholders eligible to receive a dividend. The ex-dividend date is important because any transaction on a stock needs to have been settled before the record date in order to be eligible for a dividend. This means that investors who purchase Happiest Minds Technologies' shares on or after the 23rd of June will not receive the dividend, which will be paid on the 30th of July.
The company's next dividend payment will be ₹2.00 per share. Last year, in total, the company distributed ₹4.00 to shareholders. Looking at the last 12 months of distributions, Happiest Minds Technologies has a trailing yield of approximately 0.5% on its current stock price of ₹826.5. We love seeing companies pay a dividend, but it's also important to be sure that laying the golden eggs isn't going to kill our golden goose! So we need to investigate whether Happiest Minds Technologies can afford its dividend, and if the dividend could grow.
See our latest analysis for Happiest Minds Technologies
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. That's why it's good to see Happiest Minds Technologies paying out a modest 29% of its earnings. A useful secondary check can be to evaluate whether Happiest Minds Technologies generated enough free cash flow to afford its dividend. It distributed 42% of its free cash flow as dividends, a comfortable payout level for most companies.
It's encouraging to see that the dividend is covered by both profit and cash flow. This generally suggests the dividend is sustainable, as long as earnings don't drop precipitously.
Click here to see the company's payout ratio, plus analyst estimates of its future dividends.
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 Happiest Minds Technologies's earnings have been skyrocketing, up 61% per annum for the past five years. Earnings per share have been growing very quickly, and the company is paying out a relatively low percentage of its profit and cash flow. Companies with growing earnings and low payout ratios are often the best long-term dividend stocks, as the company can both grow its earnings and increase the percentage of earnings that it pays out, essentially multiplying the dividend.
Given that Happiest Minds Technologies has only been paying a dividend for a year, there's not much of a past history to draw insight from.
Is Happiest Minds Technologies worth buying for its dividend? We love that Happiest Minds Technologies is growing earnings per share while simultaneously paying out a low percentage of both its earnings and cash flow. These characteristics suggest the company is reinvesting in growing its business, while the conservative payout ratio also implies a reduced risk of the dividend being cut in the future. Overall we think this is an attractive combination and worthy of further research.
While it's tempting to invest in Happiest Minds Technologies for the dividends alone, you should always be mindful of the risks involved. Case in point: We've spotted 2 warning signs for Happiest Minds Technologies you should be aware of.
Generally, we wouldn't recommend just buying the first dividend stock you see. Here's a curated list of interesting stocks that are strong dividend payers.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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