Aegis Logistics Limited (NSE:AEGISCHEM) is about to trade ex-dividend in the next 3 days. The ex-dividend date is one business day before a company’s record date, which is the date on which the company determines which shareholders are entitled to receive a dividend. It is important to be aware of the ex-dividend date because any trade on the stock needs to have been settled on or before the record date. Meaning, you will need to purchase Aegis Logistics’ shares before the 17th of February to receive the dividend, which will be paid on the 11th of March.
The company’s next dividend payment will be ₹2.00 per share. Last year, in total, the company distributed ₹4.00 to shareholders. Based on the last year’s worth of payments, Aegis Logistics stock has a trailing yield of around 1.9% on the current share price of ₹216.5. If you buy this business for its dividend, you should have an idea of whether Aegis Logistics’s dividend is reliable and sustainable. As a result, readers should always check whether Aegis Logistics has been able to grow its dividends, or if the dividend might be cut.
See our latest analysis for Aegis Logistics
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. Aegis Logistics paid out just 13% of its profit last year, which we think is conservatively low and leaves plenty of margin for unexpected circumstances. 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. Over the last year it paid out 61% of its free cash flow as dividends, within the usual range for most companies.
It’s positive to see that Aegis Logistics’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.
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 earnings decline and the company is forced to cut its dividend, investors could watch the value of their investment go up in smoke. This is why it’s a relief to see Aegis Logistics earnings per share are up 9.5% per annum over the last five years. While earnings have been growing at a credible rate, the company is paying out a majority of its earnings to shareholders. Therefore it’s unlikely that the company will be able to reinvest heavily in its business, which could presage slower growth in the future.
The main way most investors will assess a company’s dividend prospects is by checking the historical rate of dividend growth. In the last 10 years, Aegis Logistics has lifted its dividend by approximately 26% a year on average. It’s encouraging to see the company lifting dividends while earnings are growing, suggesting at least some corporate interest in rewarding shareholders.
To Sum It Up
Has Aegis Logistics got what it takes to maintain its dividend payments? Earnings per share have been growing at a steady rate, and Aegis Logistics paid out less than half its profits and more than half its free cash flow as dividends over the last year. All things considered, we are not particularly enthused about Aegis Logistics from a dividend perspective.
While it’s tempting to invest in Aegis Logistics for the dividends alone, you should always be mindful of the risks involved. For example, we’ve found 1 warning sign for Aegis Logistics that we recommend you consider before investing in the business.
A common investment mistake is buying the first interesting stock you see. Here you can find a list of promising dividend stocks with a greater than 2% yield and an upcoming dividend.
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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.
