KPIT Technologies Limited (NSE:KPITTECH) Passed Our Checks, And It's About To Pay A ₹1.85 Dividend – Simply Wall St
It looks like KPIT Technologies Limited (NSE:KPITTECH) is about to go ex-dividend in the next 3 days. The ex-dividend date occurs one day before the record date which is the day on which shareholders need to be on the company's books in order to receive a dividend. The ex-dividend date is an important date to be aware of as any purchase of the stock made on or after this date might mean a late settlement that doesn't show on the record date. Thus, you can purchase KPIT Technologies' shares before the 12th of August in order to receive the dividend, which the company will pay on the 23rd of September.
The company's next dividend payment will be ₹1.85 per share, and in the last 12 months, the company paid a total of ₹3.70 per share. Calculating the last year's worth of payments shows that KPIT Technologies has a trailing yield of 0.7% on the current share price of ₹535.9. Dividends are an important source of income to many shareholders, but the health of the business is crucial to maintaining those dividends. As a result, readers should always check whether KPIT Technologies has been able to grow its dividends, or if the dividend might be cut.
View our latest analysis for KPIT Technologies
If a company pays out more in dividends than it earned, then the dividend might become unsustainable – hardly an ideal situation. KPIT Technologies paid out a comfortable 28% of its profit last year. 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. The good news is it paid out just 18% of its free cash flow in the last year.
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.
Companies with consistently growing earnings per share generally make the best dividend stocks, as they usually find it easier to grow dividends per share. If earnings fall far enough, the company could be forced to cut its dividend. That's why it's comforting to see KPIT Technologies's earnings have been skyrocketing, up 105% per annum for the past five years. KPIT Technologies is paying out less than half its earnings and cash flow, while simultaneously growing earnings per share at a rapid clip. This is a very favourable combination that can often lead to the dividend multiplying over the long term, if earnings grow and the company pays out a higher percentage of its earnings.
Many investors will assess a company's dividend performance by evaluating how much the dividend payments have changed over time. In the last three years, KPIT Technologies has lifted its dividend by approximately 70% a year on average. It's exciting to see that both earnings and dividends per share have grown rapidly over the past few years.
Has KPIT Technologies got what it takes to maintain its dividend payments? KPIT Technologies has been growing earnings at a rapid rate, and has a conservatively low payout ratio, implying that it is reinvesting heavily in its business; a sterling combination. Overall we think this is an attractive combination and worthy of further research.
In light of that, while KPIT Technologies has an appealing dividend, it's worth knowing the risks involved with this stock. To help with this, we've discovered 1 warning sign for KPIT Technologies that you should be aware of before investing in their shares.
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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KPIT Technologies Limited provides embedded software, artificial intelligence, and digital solutions for the automobile and mobility sector in the Americas, the United Kingdom, rest of Europe, and internationally.
Outstanding track record with excellent balance sheet.
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