Stock Analysis

Endurance Technologies' (NSE:ENDURANCE) Shareholders Will Receive A Bigger Dividend Than Last Year

NSEI:ENDURANCE
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Endurance Technologies Limited's (NSE:ENDURANCE) dividend will be increasing from last year's payment of the same period to ₹6.25 on 22nd of September. Despite this raise, the dividend yield of 0.4% is only a modest boost to shareholder returns.

See our latest analysis for Endurance Technologies

Endurance Technologies' Earnings Easily Cover the Distributions

Even a low dividend yield can be attractive if it is sustained for years on end. Before making this announcement, Endurance Technologies was easily earning enough to cover the dividend. This means that most of what the business earns is being used to help it grow.

Over the next year, EPS is forecast to expand by 126.5%. If the dividend continues on this path, the payout ratio could be 9.6% by next year, which we think can be pretty sustainable going forward.

historic-dividend
NSEI:ENDURANCE Historic Dividend July 19th 2022

Endurance Technologies Is Still Building Its Track Record

It is great to see that Endurance Technologies has been paying a stable dividend for a number of years now, however we want to be a bit cautious about whether this will remain true through a full economic cycle. Since 2017, the dividend has gone from ₹2.50 total annually to ₹6.25. This implies that the company grew its distributions at a yearly rate of about 20% over that duration. Endurance Technologies 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.

Endurance Technologies Could Grow Its Dividend

Investors who have held shares in the company for the past few years will be happy with the dividend income they have received. It's encouraging to see that Endurance Technologies has been growing its earnings per share at 6.9% a year over the past five years. A low payout ratio and decent growth suggests that the company is reinvesting well, and it also has plenty of room to increase the dividend over time.

Our Thoughts On Endurance Technologies' Dividend

Overall, this is a reasonable dividend, and it being raised is an added bonus. The payout ratio looks good, but unfortunately the company's dividend track record isn't stellar. The payment isn't stellar, but it could make a decent addition to a dividend portfolio.

Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. Taking the debate a bit further, we've identified 1 warning sign for Endurance Technologies that investors need to be conscious of moving forward. Is Endurance Technologies not quite the opportunity you were looking for? Why not check out 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.