Is It Smart To Buy Pulz Electronics Limited (NSE:PULZ) Before It Goes Ex-Dividend?

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 Pulz Electronics Limited (NSE:PULZ) is about to go ex-dividend in just 3 days. Ex-dividend means that investors that purchase the stock on or after the 23rd of January will not receive this dividend, which will be paid on the 12th of February.

Pulz Electronics’s next dividend payment will be ₹0.25 per share, on the back of last year when the company paid a total of ₹0.25 to shareholders. Based on the last year’s worth of payments, Pulz Electronics has a trailing yield of 2.8% on the current stock price of ₹18. If you buy this business for its dividend, you should have an idea of whether Pulz Electronics’s dividend is reliable and sustainable. So we need to check whether the dividend payments are covered, and if earnings are growing.

View our latest analysis for Pulz Electronics

If a company pays out more in dividends than it earned, then the dividend might become unsustainable – hardly an ideal situation. Pulz Electronics has a low and conservative payout ratio of just 4.7% of its income after tax.

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

NSEI:PULZ Historical Dividend Yield, January 19th 2020
NSEI:PULZ Historical Dividend Yield, January 19th 2020

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 earnings fall far enough, the company could be forced to cut its dividend. That’s why it’s comforting to see Pulz Electronics’s earnings have been skyrocketing, up 83% per annum for the past five years.

This is Pulz Electronics’s first year of paying a dividend, which is exciting for shareholders – but it does mean there’s no dividend history to examine.

The Bottom Line

From a dividend perspective, should investors buy or avoid Pulz Electronics? 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. Pulz Electronics ticks a lot of boxes for us from a dividend perspective, and we think these characteristics should mark the company as deserving of further attention.

Want to learn more about Pulz Electronics? Here’s a visualisation of its historical rate of revenue and earnings growth.

We wouldn’t recommend just buying the first dividend stock you see, though. Here’s a list of interesting dividend stocks with a greater than 2% yield and an upcoming dividend.


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