Gabriel India (NSE:GABRIEL) Is Paying Out A Larger Dividend Than Last Year

Gabriel India Limited's (NSE:GABRIEL) dividend will be increasing from last year's payment of the same period to ₹1.00 on 3rd of September. This will take the annual payment to 1.2% of the stock price, which is above what most companies in the industry pay.

View our latest analysis for Gabriel India

Gabriel India's Dividend Is Well Covered By Earnings

Impressive dividend yields are good, but this doesn't matter much if the payments can't be sustained. Based on the last payment, Gabriel India was paying only paying out a fraction of earnings, but the payment was a massive 118% of cash flows. While the business may be attempting to set a balanced dividend policy, a cash payout ratio this high might expose the dividend to being cut if the business ran into some challenges.

If the trend of the last few years continues, EPS will grow by 1.6% over the next 12 months. Assuming the dividend continues along recent trends, we think the payout ratio could be 25% by next year, which is in a pretty sustainable range.

Dividend Volatility

The company's dividend history has been marked by instability, with at least one cut in the last 10 years. The annual payment during the last 10 years was ₹0.55 in 2012, and the most recent fiscal year payment was ₹1.55. This means that it has been growing its distributions at 11% per annum over that time. Dividends have grown rapidly over this time, but with cuts in the past we are not certain that this stock will be a reliable source of income in the future.

The Dividend's Growth Prospects Are Limited

Growing earnings per share could be a mitigating factor when considering the past fluctuations in the dividend. Although it's important to note that Gabriel India's earnings per share has basically not grown from where it was five years ago, which could erode the purchasing power of the dividend over time. If Gabriel India is struggling to find viable investments, it always has the option to increase its payout ratio to pay more to shareholders.

Our Thoughts On Gabriel India's Dividend

Overall, this is probably not a great income stock, even though the dividend is being raised at the moment. While Gabriel India is earning enough to cover the payments, the cash flows are lacking. We would be a touch cautious of relying on this stock primarily for the dividend income.

Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. Just as an example, we've come across 2 warning signs for Gabriel India you should be aware of, and 1 of them can't be ignored. Is Gabriel India 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.