The Hi-Tech Gears Limited (NSE:HITECHGEAR) Pays A ₹4.00 Dividend In Just Three Days
Readers hoping to buy The Hi-Tech Gears Limited (NSE:HITECHGEAR) for its dividend will need to make their move shortly, as the stock is about to trade ex-dividend. The ex-dividend date is two business days before a company's record date in most cases, which is the date on which the company determines which shareholders are entitled 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 Hi-Tech Gears' shares before the 15th of September in order to receive the dividend, which the company will pay on the 22nd of October.
The company's next dividend payment will be ₹4.00 per share, and in the last 12 months, the company paid a total of ₹4.00 per share. Based on the last year's worth of payments, Hi-Tech Gears has a trailing yield of 0.7% on the current stock price of ₹579.45. If you buy this business for its dividend, you should have an idea of whether Hi-Tech Gears's dividend is reliable and sustainable. So we need to check whether the dividend payments are covered, and if earnings are growing.
Dividends are typically paid from company earnings. If a company pays more in dividends than it earned in profit, then the dividend could be unsustainable. That's why it's good to see Hi-Tech Gears paying out a modest 36% of its earnings. Yet cash flows are even more important than profits for assessing a dividend, so we need to see if the company generated enough cash to pay its distribution. It paid out 17% of its free cash flow as dividends last year, which is conservatively low.
It's positive to see that Hi-Tech Gears's dividend is covered by both profits and cash flow, since this is generally a sign that the dividend is sustainable, and a lower payout ratio usually suggests a greater margin of safety before the dividend gets cut.
View our latest analysis for Hi-Tech Gears
Click here to see how much of its profit Hi-Tech Gears paid out over the last 12 months.
Have Earnings And Dividends Been Growing?
Companies with falling earnings are riskier for dividend shareholders. If earnings fall far enough, the company could be forced to cut its dividend. Readers will understand then, why we're concerned to see Hi-Tech Gears's earnings per share have dropped 7.3% a year over the past five years. Ultimately, when earnings per share decline, the size of the pie from which dividends can be paid, shrinks.
Many investors will assess a company's dividend performance by evaluating how much the dividend payments have changed over time. Hi-Tech Gears has delivered 2.9% dividend growth per year on average over the past 10 years.
Final Takeaway
Is Hi-Tech Gears an attractive dividend stock, or better left on the shelf? Hi-Tech Gears has comfortably low cash and profit payout ratios, which may mean the dividend is sustainable even in the face of a sharp decline in earnings per share. Still, we consider declining earnings to be a warning sign. In summary, it's hard to get excited about Hi-Tech Gears from a dividend perspective.
On that note, you'll want to research what risks Hi-Tech Gears is facing. In terms of investment risks, we've identified 2 warning signs with Hi-Tech Gears and understanding them should be part of your investment process.
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.