Stock Analysis

Gabriel India's (NSE:GABRIEL) Shareholders Will Receive A Bigger Dividend Than Last Year

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NSEI:GABRIEL
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The board of Gabriel India Limited (NSE:GABRIEL) has announced that it will be paying its dividend of ₹0.90 on the 9th of December, an increased payment from last year's comparable dividend. This takes the dividend yield to 1.1%, which shareholders will be pleased with.

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Gabriel India's Earnings Easily Cover The Distributions

If the payments aren't sustainable, a high yield for a few years won't matter that much. Before making this announcement, Gabriel India was paying a whopping 223% as a dividend, but this only made up 22% of its overall earnings. A cash payout ratio this high could put the dividend under pressure and force the company to reduce it in the future if it were to run into tough times.

Over the next year, EPS could expand by 7.0% if recent trends continue. If the dividend continues on this path, the payout ratio could be 21% by next year, which we think can be pretty sustainable going forward.

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NSEI:GABRIEL Historic Dividend November 17th 2022

Dividend Volatility

The company has a long dividend track record, but it doesn't look great with cuts in the past. The dividend has gone from an annual total of ₹0.50 in 2012 to the most recent total annual payment of ₹1.90. This means that it has been growing its distributions at 14% 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.

Gabriel India Could Grow Its Dividend

With a relatively unstable dividend, it's even more important to see if earnings per share is growing. We are encouraged to see that Gabriel India has grown earnings per share at 7.0% per year over the past five years. Gabriel India definitely has the potential to grow its dividend in the future with earnings on an uptrend and a low payout ratio.

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. This company is not in the top tier of income providing stocks.

Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. 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 is a bit concerning. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.

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