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Fiem Industries (NSE:FIEMIND) Is Increasing Its Dividend To ₹16.00
Fiem Industries Limited (NSE:FIEMIND) has announced that it will be increasing its dividend on the 15th of October to ₹16.00. This will take the annual payment to 1.6% of the stock price, which is above what most companies in the industry pay.
While the dividend yield is important for income investors, it is also important to consider any large share price moves, as this will generally outweigh any gains from distributions. Investors will be pleased to see that Fiem Industries' stock price has increased by 46% in the last 3 months, which is good for shareholders and can also explain a decrease in the dividend yield.
Check out our latest analysis for Fiem Industries
Fiem Industries' Dividend Is Well Covered By Earnings
Impressive dividend yields are good, but this doesn't matter much if the payments can't be sustained. However, prior to this announcement, Fiem Industries' dividend was comfortably covered by both cash flow and earnings. This means that most of its earnings are being retained to grow the business.
If the trend of the last few years continues, EPS will grow by 5.7% over the next 12 months. Assuming the dividend continues along recent trends, we think the payout ratio could be 26% by next year, which is in a pretty sustainable range.
Dividend Volatility
Although the company has a long dividend history, it has been cut at least once in the last 10 years. The dividend has gone from ₹2.50 in 2011 to the most recent annual payment of ₹16.00. This implies that the company grew its distributions at a yearly rate of about 20% over that duration. It is great to see strong growth in the dividend payments, but cuts are concerning as it may indicate the payout policy is too ambitious.
We Could See Fiem Industries' Dividend Growing
With a relatively unstable dividend, it's even more important to see if earnings per share is growing. Fiem Industries has impressed us by growing EPS at 5.7% per year over the past five years. With a decent amount of growth and a low payout ratio, we think this bodes well for Fiem Industries' prospects of growing its dividend payments in the future.
Our Thoughts On Fiem Industries' Dividend
In summary, it's great to see that the company can raise the dividend and keep it in a sustainable range. The payout ratio looks good, but unfortunately the company's dividend track record isn't stellar. The dividend looks okay, but there have been some issues in the past, so we would be a little bit cautious.
Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. However, there are other things to consider for investors when analysing stock performance. As an example, we've identified 2 warning signs for Fiem Industries that you should be aware of before investing. We have also put together a list of global stocks with a solid dividend.
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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.
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About NSEI:FIEMIND
Fiem Industries
Manufactures and supplies automotive lighting and signaling equipment, rear view mirrors, and sheet metal and plastic parts in India and internationally.
Flawless balance sheet, undervalued and pays a dividend.