Balkrishna Industries (NSE:BALKRISIND) Is Due To Pay A Dividend Of ₹4.00

The board of Balkrishna Industries Limited (NSE:BALKRISIND) has announced that it will pay a dividend of ₹4.00 per share on the 24th of November. This means the dividend yield will be fairly typical at 0.5%.

Check out our latest analysis for Balkrishna Industries

Balkrishna Industries' Payment Could Potentially Have Solid Earnings Coverage

We like a dividend to be consistent over the long term, so checking whether it is sustainable is important. Before making this announcement, Balkrishna Industries was easily earning enough to cover the dividend. As a result, a large proportion of what it earned was being reinvested back into the business.

Looking forward, earnings per share is forecast to rise by 43.0% over the next year. If the dividend continues on this path, the payout ratio could be 15% by next year, which we think can be pretty sustainable going forward.

Dividend Volatility

Although the company has a long dividend history, it has been cut at least once in the last 10 years. The annual payment during the last 10 years was ₹1.00 in 2014, and the most recent fiscal year payment was ₹16.00. This means that it has been growing its distributions at 32% per annum over that time. Despite the rapid growth in the dividend over the past number of years, we have seen the payments go down the past as well, so that makes us cautious.

The Dividend Looks Likely To Grow

With a relatively unstable dividend, it's even more important to evaluate if earnings per share is growing, which could point to a growing dividend in the future. It's encouraging to see that Balkrishna Industries has been growing its earnings per share at 15% a year over the past five years. With a decent amount of growth and a low payout ratio, we think this bodes well for Balkrishna Industries' prospects of growing its dividend payments in the future.

We Really Like Balkrishna Industries' Dividend

In summary, it is good to see that the dividend is staying consistent, and we don't think there is any reason to suspect this might change over the medium term. Earnings are easily covering distributions, and the company is generating plenty of cash. All of these factors considered, we think this has solid potential as a dividend stock.

Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. Taking the debate a bit further, we've identified 1 warning sign for Balkrishna Industries that investors need to be conscious of moving forward. Is Balkrishna Industries not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

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