Emkay Global Financial Services Limited (NSE:EMKAY) The stock is set to trade ex-dividend in 4 days. The ex-dividend date is one business day before a company’s record date, which is the date the company determines which shareholders are entitled to receive a dividend. The ex-dividend date is important because each time a stock is bought or sold, the transaction takes at least two business days to settle. This means that investors who buy shares of Emkay Global Financial Services on or after July 29 will not receive the dividend, which will be paid on September 7.
The company’s next dividend payment will be ₹1.25 per share. Last year, in total, the company distributed ₹1.25 to shareholders. Calculating the value of last year’s payments shows that Emkay Global Financial Services has a yield of 1.7% on the current share price of ₹73.6. We love to see companies pay out a dividend, but it’s also important to make sure that laying the golden eggs doesn’t kill our golden hen! We therefore need to check whether dividend payments are covered and whether profits are increasing.
Check out our latest analysis for Emkay Global Financial Services
Dividends are usually paid out of company earnings, so if a company pays out more than it has earned, its dividend is usually at risk of being reduced. Emkay Global Financial Services only pays out 9.1% of its profit after tax, which is comfortably low and leaves plenty of room for adverse events.
When a company has paid out less in dividends than it has earned in profits, this generally suggests that its dividend is affordable. The lower the percentage of its profits it pays out, the greater the margin of safety for the dividend if the company goes into a recession.
Click here to see how much profit Emkay Global Financial Services has paid out over the past 12 months.
Have earnings and dividends increased?
Stocks of companies that generate sustainable earnings growth often offer the best dividend prospects because it is easier to increase the dividend when earnings increase. If earnings fall enough, the company could be forced to cut its dividend. It is encouraging to see that Emkay Global Financial Services has grown its revenue rapidly, growing by 22% per year over the past five years.
Many investors will gauge a company’s dividend yield by evaluating how much dividend payouts have changed over time. Since our data began 10 years ago, Emkay Global Financial Services has increased its dividend by about 2.3% per year on average. It’s good to see that earnings and the dividend have improved – although the former has grown much faster than the latter, perhaps because the company has reinvested more of its earnings into growth.
Does Emkay Global Financial Services have what it takes to maintain its dividend payments? Companies like Emkay Global Financial Services, which grow rapidly and pay out only a small fraction of profits, typically reinvest heavily in their business. This strategy can add significant shareholder value over the long term – as long as it is accomplished without issuing too many new shares. Overall, Emkay Global Financial Services looks like a promising dividend stock in this analysis, and we think it would be worth investigating further.
With this in mind, an essential part of thorough stock research is to be aware of all the risks stocks currently face. For example, we have identified 4 warning signs for Emkay Global Financial Services (1 should not be ignored) which you should be aware of.
If you are looking for good dividend payers, we recommend by consulting our selection of the best dividend-paying stocks.
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This Simply Wall St article is general in nature. We provide commentary based on historical data and analyst forecasts only using unbiased methodology and our articles are not intended to be financial advice. It is not a recommendation to buy or sell stocks and does not take into account your objectives or financial situation. Our goal is to bring you targeted long-term analysis based on fundamental data. Note that our analysis may not take into account the latest announcements from price-sensitive companies or qualitative materials. Simply Wall St has no position in the stocks mentioned.