Should You Buy Chennai Petroleum Corporation Limited (NSE:CHENNPETRO) For Its Upcoming Dividend?

Chennai Petroleum Corporation Limited (NSE:CHENNPETRO) stock is about to trade ex-dividend in three days. The ex-dividend date is commonly two business days 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. It is important to be aware of the ex-dividend date because any trade on the stock needs to have been settled on or before the record date. Meaning, you will need to purchase Chennai Petroleum’s shares before the 2nd of April to receive the dividend, which will be paid on the 25th of April.

The company’s upcoming dividend is ₹8.00 a share, following on from the last 12 months, when the company distributed a total of ₹5.00 per share to shareholders. Calculating the last year’s worth of payments shows that Chennai Petroleum has a trailing yield of 0.5% on the current share price of ₹959.75. If you buy this business for its dividend, you should have an idea of whether Chennai Petroleum’s dividend is reliable and sustainable. As a result, readers should always check whether Chennai Petroleum has been able to grow its dividends, or if the dividend might be cut.

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Dividends are typically paid from company earnings. If a company pays more in dividends than it earned in profit, then the dividend could be unsustainable. Chennai Petroleum paid out a comfortable 35% of its profit last year. Yet cash flow is typically more important than profit for assessing dividend sustainability, so we should always check if the company generated enough cash to afford its dividend. What’s good is that dividends were well covered by free cash flow, with the company paying out 19% of its cash flow last year.

It’s encouraging to see that the dividend is covered by both profit and cash flow. This generally suggests the dividend is sustainable, as long as earnings don’t drop precipitously.

Check out our latest analysis for Chennai Petroleum

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

NSEI:CHENNPETRO Historic Dividend March 29th 2026 Have Earnings And Dividends Been Growing?

Companies with consistently growing earnings per share generally make the best dividend stocks, as they usually find it easier to grow dividends per share. If earnings fall far enough, the company could be forced to cut its dividend. Fortunately for readers, Chennai Petroleum’s earnings per share have been growing at 10% a year for the past five years. The company has managed to grow earnings at a rapid rate, while reinvesting most of the profits within the business. This will make it easier to fund future growth efforts and we think this is an attractive combination – plus the dividend can always be increased later.

The main way most investors will assess a company’s dividend prospects is by checking the historical rate of dividend growth. In the last 10 years, Chennai Petroleum has lifted its dividend by approximately 2.3% a year on average. Earnings per share have been growing much quicker than dividends, potentially because Chennai Petroleum is keeping back more of its profits to grow the business.

The Bottom Line

From a dividend perspective, should investors buy or avoid Chennai Petroleum? Chennai Petroleum has grown its earnings per share while simultaneously reinvesting in the business. Unfortunately it’s cut the dividend at least once in the past 10 years, but the conservative payout ratio makes the current dividend look sustainable. There’s a lot to like about Chennai Petroleum, and we would prioritise taking a closer look at it.

On that note, you’ll want to research what risks Chennai Petroleum is facing. Every company has risks, and we’ve spotted 1 warning sign for Chennai Petroleum you should know about.

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

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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.