Some investors rely on dividends for growing their wealth, and if you’re one of those dividend sleuths, you might be intrigued to know that SBI Life Insurance Company Limited (NSE:SBILIFE) is about to go ex-dividend in just three days. You can purchase shares before the 5th of April in order to receive the dividend, which the company will pay on the 23rd of April.
SBI Life Insurance’s next dividend payment will be ₹2.50 per share, and in the last 12 months, the company paid a total of ₹2.50 per share. Looking at the last 12 months of distributions, SBI Life Insurance has a trailing yield of approximately 0.3% on its current stock price of ₹879.4. If you buy this business for its dividend, you should have an idea of whether SBI Life Insurance’s dividend is reliable and sustainable. That’s why we should always check whether the dividend payments appear sustainable, and if the company is growing.
View our latest analysis for SBI Life Insurance
If a company pays out more in dividends than it earned, then the dividend might become unsustainable – hardly an ideal situation.
When a company paid out less in dividends than it earned in profit, this generally suggests its dividend is affordable. The lower the % of its profit that it pays out, the greater the margin of safety for the dividend if the business enters a downturn.
Click here to see how much of its profit SBI Life Insurance paid out over the last 12 months.
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. For this reason, we’re glad to see SBI Life Insurance’s earnings per share have risen 12% per annum over the last five years.
Many investors will assess a company’s dividend performance by evaluating how much the dividend payments have changed over time. In the past three years, SBI Life Insurance has increased its dividend at approximately 7.7% 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.
The Bottom Line
Is SBI Life Insurance an attractive dividend stock, or better left on the shelf? When companies are growing rapidly and retaining a majority of the profits within the business, it’s usually a sign that reinvesting earnings creates more value than paying dividends to shareholders. This strategy can add significant value to shareholders over the long term – as long as it’s done without issuing too many new shares. In summary, SBI Life Insurance appears to have some promise as a dividend stock, and we’d suggest taking a closer look at it.
Keen to explore more data on SBI Life Insurance’s financial performance? Check out our visualisation of its historical revenue and earnings growth.
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. 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.
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