Be Sure To Check Out Bliss GVS Pharma Limited (NSE:BLISSGVS) Before It Goes Ex-Dividend

Bliss GVS Pharma Limited (NSE:BLISSGVS) stock is about to trade ex-dividend in three days. The ex-dividend date is usually set to be two business days before the record date, which is the cut-off date on which you must be present on the company’s books as a shareholder in order to receive the dividend. The ex-dividend date is of consequence because whenever a stock is bought or sold, the trade can take two business days or more to settle. Thus, you can purchase Bliss GVS Pharma’s shares before the 18th of February in order to receive the dividend, which the company will pay on the 12th of March.

The company’s next dividend payment will be ₹0.50 per share, and in the last 12 months, the company paid a total of ₹1.00 per share. Calculating the last year’s worth of payments shows that Bliss GVS Pharma has a trailing yield of 0.5% on the current share price of ₹217.82. If you buy this business for its dividend, you should have an idea of whether Bliss GVS Pharma’s dividend is reliable and sustainable. So we need to investigate whether Bliss GVS Pharma can afford its dividend, and if the dividend could grow.

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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. Bliss GVS Pharma has a low and conservative payout ratio of just 6.2% of its income after tax. 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. It paid out 8.4% of its free cash flow as dividends last year, which is conservatively low.

It’s positive to see that Bliss GVS Pharma’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 Bliss GVS Pharma

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

Have Earnings And Dividends Been Growing?

Companies that aren’t growing their earnings can still be valuable, but it is even more important to assess the sustainability of the dividend if it looks like the company will struggle to grow. Investors love dividends, so if earnings fall and the dividend is reduced, expect a stock to be sold off heavily at the same time. That explains why we’re not overly excited about Bliss GVS Pharma’s flat earnings over the past five years. It’s better than seeing them drop, certainly, but over the long term, all of the best dividend stocks are able to meaningfully grow their earnings per share. Growth has been anaemic. Yet with more than 75% of its earnings being kept in the business, there is ample room to reinvest in growth or lift the payout ratio – either of which could increase the dividend.

Many investors will assess a company’s dividend performance by evaluating how much the dividend payments have changed over time. It looks like the Bliss GVS Pharma dividends are largely the same as they were 10 years ago.

The Bottom Line

Is Bliss GVS Pharma an attractive dividend stock, or better left on the shelf? Earnings per share have been flat over this time, but we’re intrigued to see that Bliss GVS Pharma is paying out less than half its earnings and cash flow as dividends. This is interesting for a few reasons, as it suggests management may be reinvesting heavily in the business, but it also provides room to increase the dividend in time. Generally we like to see both low payout ratios and strong earnings per share growth, but Bliss GVS Pharma is halfway there. Bliss GVS Pharma looks solid on this analysis overall, and we’d definitely consider investigating it more closely.

So while Bliss GVS Pharma looks good from a dividend perspective, it’s always worthwhile being up to date with the risks involved in this stock. For instance, we’ve identified 2 warning signs for Bliss GVS Pharma (1 is a bit unpleasant) you should be aware of.

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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.