CIE Automotive India's (NSE:CIEINDIA) Dividend Will Be Increased To ₹5.00

CIE Automotive India Limited (NSE:CIEINDIA) has announced that it will be increasing its dividend from last year's comparable payment on the 20th of July to ₹5.00. This will take the annual payment to 1.0% of the stock price, which is above what most companies in the industry pay.

Check out our latest analysis for CIE Automotive India

CIE Automotive India's Earnings Easily Cover The Distributions

Impressive dividend yields are good, but this doesn't matter much if the payments can't be sustained. However, CIE Automotive India's earnings easily cover the dividend. This means that most of its earnings are being retained to grow the business.

The next year is set to see EPS grow by 35.1%. Assuming the dividend continues along recent trends, we think the payout ratio could be 18% by next year, which is in a pretty sustainable range.

CIE Automotive India Doesn't Have A Long Payment History

The dividend hasn't seen any major cuts in the past, but the company has only been paying a dividend for 2 years, which isn't that long in the grand scheme of things. Since 2022, the dividend has gone from ₹2.50 total annually to ₹5.00. This implies that the company grew its distributions at a yearly rate of about 41% over that duration. CIE Automotive India has been growing its dividend quite rapidly, which is exciting. However, the short payment history makes us question whether this performance will persist across a full market cycle.

The Dividend Has Growth Potential

The company's investors will be pleased to have been receiving dividend income for some time. CIE Automotive India has seen EPS rising for the last five years, at 7.7% per annum. With a decent amount of growth and a low payout ratio, we think this bodes well for CIE Automotive India's prospects of growing its dividend payments in the future.

Our Thoughts On CIE Automotive India's Dividend

Overall, it's great to see the dividend being raised and that it is still in a sustainable range. While the payout ratios are a good sign, we are less enthusiastic about the company's dividend record. The dividend looks okay, but there have been some issues in the past, so we would be a little bit cautious.

Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. However, there are other things to consider for investors when analysing stock performance. For example, we've picked out 2 warning signs for CIE Automotive India that investors should know about before committing capital to this stock. If you are a dividend investor, you might also want to look at our curated list of high yield dividend stocks.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.