- Sep 6, 2010
i need more of thesePower Grid Corporation of India Limited NSE Power Grid is about to go ex-dividend in the . You can purchase shares from the start of the September in order to receive the dividend, which the company will pay on the 9th of October.
Power Grid Corporation of India’s next dividend payment will be ₹4.04 per share. Last year, in total, the company distributed ₹10.00 to shareholders. Looking at the last 12 months of distributions, Power Grid Corporation of India has a trailing yield of approximately 5.5% on its current stock price of ₹182.3. 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! We need to see whether the dividend is covered by earnings and if it’s growing.
Dividends are usually paid out of company profits, so if a company pays out more than it earned then its dividend is usually at greater risk of being cut. That’s why it’s good to see Power Grid Corporation of India paying out a modest 49% of its earnings. 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 22% of its free cash flow in the last year.
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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.
Power Grid Corporation of India has grown its earnings per share while simultaneously reinvesting in the business. Unfortunately it’s cut the dividend at least once in the past 10 years, but the conservative payout ratio makes the current dividend look sustainable. Overall we think this is an attractive combination and worthy of further research.
On that note, you’ll want to research what risks Power Grid Corporation of India is facing. For example, Power Grid Corporation of India has 2 warnings think you should know about.