TAJGVK Hotels & Resorts Limited (NSE:TAJGVK) Looks Interesting, And It's About To Pay A Dividend
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TAJGVK Hotels & Resorts Limited (NSE:TAJGVK) is about to trade ex-dividend in the next 3 days. If you purchase the stock on or after the 16th of July, you won't be eligible to receive this dividend, when it is paid on the 24th of August.
TAJGVK Hotels & Resorts's upcoming dividend is ₹0.60 a share, following on from the last 12 months, when the company distributed a total of ₹0.60 per share to shareholders. Based on the last year's worth of payments, TAJGVK Hotels & Resorts has a trailing yield of 0.3% on the current stock price of ₹184.9. We love seeing companies pay a dividend, but it's also important to be sure that laying the golden eggs isn't going to kill our golden goose! 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 TAJGVK Hotels & Resorts
If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. TAJGVK Hotels & Resorts is paying out just 14% of its profit after tax, which is comfortably low and leaves plenty of breathing room in the case of adverse events. 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. What's good is that dividends were well covered by free cash flow, with the company paying out 8.9% of its cash flow last year.
It's positive to see that TAJGVK Hotels & Resorts'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 business enters a downturn and the dividend is cut, the company could see its value fall precipitously. It's encouraging to see TAJGVK Hotels & Resorts has grown its earnings rapidly, up 40% a year for the past five years.
TAJGVK Hotels & Resorts looks like a real growth company, with earnings per share growing at a cracking pace and the company reinvesting most of its profits in the business.
Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. TAJGVK Hotels & Resorts's dividend payments per share have declined at 11% per year on average over the past 10 years, which is uninspiring. TAJGVK Hotels & Resorts is a rare case where dividends have been decreasing at the same time as earnings per share have been improving. It's unusual to see, and could point to unstable conditions in the core business, or more rarely an intensified focus on reinvesting profits.
The Bottom Line
From a dividend perspective, should investors buy or avoid TAJGVK Hotels & Resorts? TAJGVK Hotels & Resorts has grown its earnings per share while simultaneously reinvesting in the business. Unfortunately it's cut the dividend at least once in the past ten years, but the conservative payout ratio makes the current dividend look sustainable. There's a lot to like about TAJGVK Hotels & Resorts, and we would prioritise taking a closer look at it.
Curious what other investors think of TAJGVK Hotels & Resorts? See what analysts are forecasting, with this visualisation of its historical and future estimated earnings and cash flow .
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.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. 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. Simply Wall St has no position in the stocks mentioned. Thank you for reading.
