Should Income Investors Look At AstraZeneca Pharma India Limited (NSE:ASTRAZEN) Before Its Ex-Dividend?

AstraZeneca Pharma India Limited (NSE:ASTRAZEN) is set to go ex-dividend in the next 4 days. The ex-dividend date is important because it determines which shareholders are entitled to receive a dividend. Shareholders who purchase the stock on or after July 5th will not receive the dividend, which will be paid on September 6th.

The company’s next dividend payment will be ₹24.00 per share, with a trailing yield of 0.4% on the current share price of ₹6250.75. It’s essential to ensure that dividend payments are covered by earnings and cash flow to maintain sustainability.

AstraZeneca Pharma India paid out 37% of its profit last year and an unsustainably high 234% of its free cash flow as dividends. This raises concerns about the company’s ability to continue funding the dividend without potential cuts in the future.

While earnings have been growing rapidly, the high cash flow payout ratio is a cause for concern. AstraZeneca Pharma India has increased its dividend by approximately 64% a year on average over the past five years, showing positive growth in dividends per share.

In summary, while AstraZeneca Pharma India has shown growth in earnings per share, the high cash flow payout ratio raises concerns about the sustainability of the dividend. Investors should be cautious and consider the risks involved before solely investing for dividends alone.