Some investors rely on dividends to grow their wealth, and if you’re one of those dividend sleuths, you might be intrigued to know that Aegis Logistics Limited (NSE: AEGISCHEM) is set to be ex-dividend in just 3 days. The ex-dividend date occurs one day before the registration date which is the day on which shareholders must be entered in the books of the company to receive a dividend. The ex-dividend date is important because every time a stock is bought or sold, the transaction takes at least two business days to settle. In other words, investors can buy Aegis Logistics shares before July 8 in order to be eligible for the dividend that will be paid out on August 19.
The company’s upcoming dividend is 2.00 per share, following the last 12 months when the company has distributed a total of 2.00 per share to shareholders. Calculation of the value of payments from last year shows that Aegis Logistics has a return of 0.6% on the current share price of 354.05. If you are buying this company for its dividend, you should know if Aegis Logistics’ dividend is reliable and sustainable. Accordingly, readers should always check whether Aegis Logistics has been able to increase its dividends or whether the dividend could be reduced.
Discover our latest analysis for Aegis Logistics
Dividends are usually paid out of company profits. If a company pays more dividends than it made a profit, the dividend could be unsustainable. Aegis Logistics paid a comfortable 31% of its profit last year. Yet cash flow is still more important than earnings in valuing a dividend, so we need to see if the company has generated enough cash to pay for its distribution. It paid more than half (59%) of its free cash flow in the past year, which is within an average range for most companies.
It is positive to see that Aegis Logistics’ dividend is covered by both earnings and cash flow, as this is usually a sign that the dividend is sustainable, and a lower payout ratio usually suggests a higher large margin of safety before the dividend is cut.
Click here to view the company’s payout ratio, as well as analysts’ estimates of its future dividends.
Have profits and dividends increased?
Stocks of companies that generate sustainable earnings growth often offer the best dividend prospects because it’s easier to raise the dividend when earnings rise. Investors love dividends, so if profits go down and the dividend is reduced, expect a stock to be sold massively at the same time. For this reason, we are pleased to see that Aegis Logistics’ earnings per share have grown by 14% per year over the past five years. Aegis Logistics pays out just over half of its profits, suggesting the company is striking a balance between reinvesting in growth and paying dividends. Given the rapid rate of growth in earnings per share and the current level of payout, there may be a possibility of further dividend increases in the future.
Most investors will primarily assess a company’s dividend prospects by checking the historical rate of dividend growth. Aegis Logistics has generated an average annual increase of 17% per annum in its dividend, based on dividend payments over the past 10 years. It’s great to see earnings per share increasing rapidly over several years, and dividends per share increasing at the same time.
Is Aegis Logistics an attractive dividend stock, or rather left on the back burner? From a dividend perspective, we’re encouraged to see that as earnings per share have gone up, the company is paying less than half of its earnings and just over half of its free cash flow. Aegis Logistics looks strong on this analysis overall, and we would certainly consider taking a closer look.
On that note, you will want to research the risks that Aegis Logistics faces. Our analysis shows 2 warning signs for Aegis Logistics and you should be aware of this before you buy any stocks.
A common investment mistake is to buy the first interesting stock you see. Here you will find a list of promising dividend paying stocks with a yield above 2% and an upcoming dividend.
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This Simply Wall St article is general in nature. It does not constitute a recommendation to buy or sell shares and does not take into account your goals or your financial situation. Our aim is to bring you long-term, targeted analysis based on fundamental data. Note that our analysis may not take into account the latest announcements from price sensitive companies or qualitative material. Simply Wall St has no position in the mentioned stocks.
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