Consumer Durables News

Here’s What We Like About BSL’s (NSE:BSL) Upcoming Dividend


BSL Limited (NSE:BSL) is about to trade ex-dividend in the next three days. The ex-dividend date is one business day 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. Accordingly, BSL investors that purchase the stock on or after the 20th of September will not receive the dividend, which will be paid on the 5th of October.

The company’s next dividend payment will be ₹1.20 per share. Last year, in total, the company distributed ₹1.20 to shareholders. Based on the last year’s worth of payments, BSL has a trailing yield of 0.8% on the current stock price of ₹146.85. Dividends are an important source of income to many shareholders, but the health of the business is crucial to maintaining those dividends. That’s why we should always check whether the dividend payments appear sustainable, and if the company is growing.

Check out our latest analysis for BSL

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. BSL paid out just 11% of its profit last year, which we think is conservatively low and leaves plenty of margin for unexpected circumstances. BSL paid a dividend despite reporting negative free cash flow last year. That’s typically a bad combination and – if this were more than a one-off – not sustainable.

Click here to see how much of its profit BSL paid out over the last 12 months.

NSEI:BSL Historic Dividend September 16th 2022

Have Earnings And Dividends Been Growing?

Stocks in companies that generate sustainable earnings growth often make the best dividend prospects, as it is easier to lift the dividend when earnings are rising. 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 BSL’s earnings per share have risen 15% 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. BSL has delivered an average of 2.3% per year annual increase in its dividend, based on the past eight years of dividend payments. It’s good to see both earnings and the dividend have improved – although the former has been rising much quicker than the latter, possibly due to the company reinvesting more of its profits in growth.

The Bottom Line

From a dividend perspective, should investors buy or avoid BSL? Typically, companies that are growing rapidly and paying out a low fraction of earnings are keeping the profits for reinvestment in the business. 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, BSL appears to have some promise as a dividend stock, and we’d suggest taking a closer look at it.

With that in mind, a critical part of thorough stock research is being aware of any risks that stock currently faces. Be aware that BSL is showing 4 warning signs in our investment analysis, and 1 of those shouldn’t be ignored…

If you’re in the market for strong dividend payers, we recommend checking our selection of top dividend stocks.

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.

Valuation is complex, but we’re helping make it simple.

Find out whether BSL is potentially over or undervalued by checking out our comprehensive analysis, which includes fair value estimates, risks and warnings, dividends, insider transactions and financial health.

View the Free Analysis



Source link

Leave a Comment