Sandhar Technologies (NSE:SANDHAR) Is Paying Out A Larger Dividend Than Last Year

Sandhar Technologies Limited's (NSE:SANDHAR) dividend will be increasing to ₹1.00 on 23rd of October. This will take the annual payment from 0.9% to 0.9% of the stock price, which is above what most companies in the industry pay.

See our latest analysis for Sandhar Technologies

Sandhar Technologies' Payment Has Solid Earnings Coverage

A big dividend yield for a few years doesn't mean much if it can't be sustained. However, prior to this announcement, Sandhar Technologies' dividend was comfortably covered by both cash flow and earnings. 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 along recent trends, we estimate the payout ratio will be 12%, which is in the range that makes us comfortable with the sustainability of the dividend.

Sandhar Technologies' Dividend Has Lacked Consistency

Even in its short history, we have seen the dividend cut. The dividend has gone from ₹2.50 in 2018 to the most recent annual payment of ₹2.25. This works out to be a decline of approximately 3.5% per year over that time. Declining dividends isn't generally what we look for as they can indicate that the company is running into some challenges.

The Dividend Looks Likely To Grow

With a relatively unstable dividend, it's even more important to see if earnings per share is growing. It's encouraging to see Sandhar Technologies has been growing its earnings per share at 18% a year over the past five years. 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.

We Really Like Sandhar Technologies' Dividend

Overall, a dividend increase is always good, and we think that Sandhar Technologies is a strong income stock thanks to its track record and growing earnings. The company is easily earning enough to cover its dividend payments and it is great to see that these earnings are being translated into cash flow. 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 instance, we've picked out 1 warning sign for Sandhar Technologies that investors should take into consideration. If you are a dividend investor, you might also want to look at our curated list of high performing dividend stock.

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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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