Sandhar Technologies (NSE:SANDHAR) Has Announced That It Will Be Increasing Its Dividend To ₹1.00

By
Simply Wall St
Published
September 06, 2021
NSEI:SANDHAR
Source: Shutterstock

The board of Sandhar Technologies Limited (NSE:SANDHAR) has announced that it will be increasing its dividend on the 23rd of October to ₹1.00. This takes the dividend yield from 0.8% to 0.8%, which shareholders will be pleased with.

Check out our latest analysis for Sandhar Technologies

Sandhar Technologies' Dividend Is Well Covered By Earnings

While it is great to have a strong dividend yield, we should also consider whether the payment is sustainable. However, Sandhar Technologies' earnings easily cover the dividend. This means that most of its earnings are being retained to grow the business.

Looking forward, earnings per share is forecast to rise by 26.6% over the next year. If the dividend continues on this path, the payout ratio could be 12% by next year, which we think can be pretty sustainable going forward.

historic-dividend
NSEI:SANDHAR Historic Dividend September 7th 2021

Sandhar Technologies' Dividend Has Lacked Consistency

Looking back, the company hasn't been paying the most consistent dividend, but with such a short dividend history it could be too early to draw solid conclusions. Since 2018, the first annual payment was ₹2.50, compared to the most recent full-year payment of ₹2.25. The dividend has shrunk at around 3.5% a year during that period. A company that decreases its dividend over time generally isn't what we are looking for.

The Dividend Looks Likely To Grow

Given that the dividend has been cut in the past, we need to check if earnings are growing and if that might lead to stronger dividends in the future. Sandhar Technologies has seen EPS rising for the last five years, at 18% per annum. With a decent amount of growth and a low payout ratio, we think this bodes well for Sandhar Technologies' prospects of growing its dividend payments in the future.

Sandhar Technologies Looks Like A Great Dividend Stock

In summary, it is always positive to see the dividend being increased, and we are particularly pleased with its overall sustainability. Earnings are easily covering distributions, and the company is generating plenty of cash. All of these factors considered, we think this has solid potential as a dividend stock.

Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. For example, we've picked out 1 warning sign for Sandhar Technologies that investors should know about before committing capital to this stock. Looking for more high-yielding dividend ideas? Try our curated list of strong dividend payers.

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