Here's What We Like About Blue Dart Express' (NSE:BLUEDART) Upcoming Dividend
Blue Dart Express Limited (NSE:BLUEDART) is about to trade ex-dividend in the next 3 days. The ex-dividend date is commonly two business days before the record date, which is the cut-off date for shareholders to be present on the company's books to be eligible for a dividend payment. The ex-dividend date is important because any transaction on a stock needs to have been settled before the record date in order to be eligible for a dividend. In other words, investors can purchase Blue Dart Express' shares before the 15th of September in order to be eligible for the dividend, which will be paid on the 22nd of October.
The company's upcoming dividend is ₹25.00 a share, following on from the last 12 months, when the company distributed a total of ₹25.00 per share to shareholders. Based on the last year's worth of payments, Blue Dart Express stock has a trailing yield of around 0.5% on the current share price of ₹4882.60. Dividends are an important source of income to many shareholders, but the health of the business is crucial to maintaining those dividends. So we need to investigate whether Blue Dart Express can afford its dividend, and if the dividend could grow.
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. Blue Dart Express is paying out just 24% of its profit after tax, which is comfortably low and leaves plenty of breathing room in the case of adverse events. That said, even highly profitable companies sometimes might not generate enough cash to pay the dividend, which is why we should always check if the dividend is covered by cash flow. Luckily it paid out just 12% of its free cash flow last year.
It's positive to see that Blue Dart Express'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.
See our latest analysis for Blue Dart Express
Click here to see the company's payout ratio, plus analyst estimates of its future dividends.
Have Earnings And Dividends Been Growing?
Businesses with strong growth prospects usually make the best dividend payers, because it's easier to grow dividends when earnings per share are improving. If business enters a downturn and the dividend is cut, the company could see its value fall precipitously. That's why it's comforting to see Blue Dart Express's earnings have been skyrocketing, up 23% per annum for the past five years. Blue Dart Express earnings per share have been sprinting ahead like the Road Runner at a track and field day; scarcely stopping even for a cheeky "beep-beep". We also like that it is reinvesting most of its profits in its business.'
Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. Blue Dart Express's dividend payments are effectively flat on where they were 10 years ago.
The Bottom Line
Has Blue Dart Express got what it takes to maintain its dividend payments? It's great that Blue Dart Express is growing earnings per share while simultaneously paying out a low percentage of both its earnings and cash flow. It's disappointing to see the dividend has been cut at least once in the past, but as things stand now, the low payout ratio suggests a conservative approach to dividends, which we like. Blue Dart Express looks solid on this analysis overall, and we'd definitely consider investigating it more closely.
On that note, you'll want to research what risks Blue Dart Express is facing. To help with this, we've discovered 1 warning sign for Blue Dart Express that you should be aware of before investing in their shares.
If you're in the market for strong dividend payers, we recommend checking our selection of top dividend stocks.
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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.