Tube Investments of India (NSE:TIINDIA) Has Announced A Dividend Of ₹1.50

The board of Tube Investments of India Limited (NSE:TIINDIA) has announced that it will pay a dividend of ₹1.50 per share on the 30th of August. This means the annual payment will be 0.1% of the current stock price, which is lower than the industry average.

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Tube Investments of India's Projected Earnings Seem Likely To Cover Future Distributions

It would be nice for the yield to be higher, but we should also check if higher levels of dividend payment would be sustainable. Prior to this announcement, Tube Investments of India's dividend was only 10% of earnings, however it was paying out 14,722% of free cash flows. The business might be trying to strike a balance between returning cash to shareholders and reinvesting back into the business, but this high of a payout ratio could definitely force the dividend to be cut if the company runs into a bit of a tough spot.

The next year is set to see EPS grow by 70.7%. If the dividend continues on this path, the payout ratio could be 6.2% by next year, which we think can be pretty sustainable going forward.

View our latest analysis for Tube Investments of India

Tube Investments of India's Dividend Has Lacked Consistency

Tube Investments of India has been paying dividends for a while, but the track record isn't stellar. This makes us cautious about the consistency of the dividend over a full economic cycle. The dividend has gone from an annual total of ₹2.50 in 2018 to the most recent total annual payment of ₹3.50. This implies that the company grew its distributions at a yearly rate of about 4.9% over that duration. The dividend has seen some fluctuations in the past, so even though the dividend was raised this year, we should remember that it has been cut in the past.

The Dividend Looks Likely To Grow

With a relatively unstable dividend, it's even more important to evaluate if earnings per share is growing, which could point to a growing dividend in the future. Tube Investments of India has impressed us by growing EPS at 16% per year over the past five years. A low payout ratio and decent growth suggests that the company is reinvesting well, and it also has plenty of room to increase the dividend over time.

In Summary

Overall, we don't think this company makes a great dividend stock, even though the dividend wasn't cut this year. With cash flows lacking, it is difficult to see how the company can sustain a dividend payment. We don't think Tube Investments of India is a great stock to add to your portfolio if income is your focus.

It's important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. Earnings growth generally bodes well for the future value of company dividend payments. See if the 4 Tube Investments of India analysts we track are forecasting continued growth with our free report on analyst estimates for the company. Is Tube Investments of India not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

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