Igarashi Motors India (NSE:IGARASHI) Will Pay A Larger Dividend Than Last Year At ₹2.50

Igarashi Motors India Limited's (NSE:IGARASHI) dividend will be increasing from last year's payment of the same period to ₹2.50 on 7th of September. This takes the annual payment to 0.5% of the current stock price, which unfortunately is below what the industry is paying.

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Igarashi Motors India's Future Dividend Projections Appear Well Covered By Earnings

While yield is important, another factor to consider about a company's dividend is whether the current payout levels are feasible. Based on the last payment, Igarashi Motors India was paying only paying out a fraction of earnings, but the payment was a massive 201% of cash flows. 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.

EPS is set to fall by 4.2% over the next 12 months if recent trends continue. If the dividend continues along the path it has been on recently, we estimate the payout ratio could be 31%, which is definitely feasible to continue.

View our latest analysis for Igarashi Motors India

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 an annual total of ₹4.44 in 2015 to the most recent total annual payment of ₹2.50. This works out to be a decline of approximately 5.6% per year over that time. A company that decreases its dividend over time generally isn't what we are looking for.

Dividend Growth May Be Hard To Achieve

Given that dividend payments have been shrinking like a glacier in a warming world, we need to check if there are some bright spots on the horizon. Over the past five years, it looks as though Igarashi Motors India's EPS has declined at around 4.2% a year. If earnings continue declining, the company may have to make the difficult choice of reducing the dividend or even stopping it completely - the opposite of dividend growth.

Igarashi Motors India's Dividend Doesn't Look Sustainable

In summary, while it's always good to see the dividend being raised, we don't think Igarashi Motors India's payments are rock solid. With cash flows lacking, it is difficult to see how the company can sustain a dividend payment. 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. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. For example, we've identified 2 warning signs for Igarashi Motors India (1 is concerning!) that you should be aware of before investing. Is Igarashi Motors 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.