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 Man Infraconstruction Limited (NSE: MANINFRA) is set to be ex-dividend in just three days. Typically, the ex-dividend date is one business day prior to the record date which is the date a company determines which shareholders are eligible to receive a dividend. The ex-dividend date is important because the settlement process involves two full business days. So if you miss this date, you will not appear on the books of the company on the date of registration. As a result, Man Infraconstruction investors who buy the shares on or after October 13 will not receive the dividend, which will be paid on November 3.
The upcoming dividend for Man Infraconstruction will put a total of 1.26 per share in the pockets of shareholders, up from last year’s total dividends of 0.90. Dividends are an important source of income for many shareholders, but the health of the business is crucial to sustaining these dividends. You have to see if the dividend is covered by profits and if it increases.
See our latest review for Man Infraconstruction
Dividends are usually paid out of the company’s profits, so if a company pays more than it earned, its dividend is usually at risk of being reduced. That’s why it’s good to see Man Infraconstruction donate a modest 35% of its revenue. A useful secondary check may be to assess whether Man Infraconstruction has generated enough free cash flow to pay its dividend. Fortunately, his dividend payments only took 28% of the free cash flow he generated, which is a comfortable payout ratio.
It is positive to see that Man Infraconstruction’s 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. margin of safety before the dividend is cut.
Click here to see how much profit Man Infraconstruction has paid in the past 12 months.
Have profits and dividends increased?
Companies with strong growth prospects generally make the best dividend payers because dividends are easier to grow when earnings per share improve. Investors love dividends, so if earnings fall and the dividend is reduced, expect a stock to be sold massively at the same time. That’s why it’s heartwarming to see that Man Infraconstruction’s revenue has skyrocketed, up 29% annually for the past five years. Man Infraconstruction is paying less than half of its profits and cash flow, while simultaneously increasing earnings per share at a rapid rate. This is a very favorable combination which can often lead to a multiplication of the dividend in the long run, if profits increase and the company pays a higher percentage of its profits.
Many investors will assess a company’s dividend yield by evaluating how much dividend payments have changed over time. Over the past 10 years, Man Infraconstruction has increased its dividend to around 5.8% per year on average. Earnings per share have grown much faster than dividends, potentially because Man Infraconstruction is withholding more of its profits to grow the business.
Is Man Infraconstruction an attractive dividend-paying stock, or better left on the shelf? It’s great that Man Infraconstruction is increasing its earnings per share while simultaneously paying out a small percentage of its earnings and cash flow. It’s disappointing that the dividend has been cut at least once in the past, but as it stands, the low payout ratio suggests a conservative approach to dividends, which we like. Man Infraconstruction looks solid on this analysis overall, and we would definitely consider taking a closer look.
So while Man Infraconstruction looks good from a dividend standpoint, it’s still worth being aware of the risks involved in this title. To help you, we have discovered 4 warning signs for Man Infraconstruction (2 make us uncomfortable!) Which you should know before buying the shares.
If you are in the dividend-paying stock market, we recommend that you check out our list of the highest dividend-paying stocks with a yield above 2% and a future dividend.
This Simply Wall St article is general in nature. We provide commentary based on historical data and analyst forecasts using only unbiased methodology and our articles are not intended to be financial advice. 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 documents. Simply Wall St has no position in the mentioned stocks.
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