Stock Analysis

Cera Sanitaryware (NSE:CERA) Is Increasing Its Dividend To ₹60.00

NSEI:CERA
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The board of Cera Sanitaryware Limited (NSE:CERA) has announced that the dividend on 10th of August will be increased to ₹60.00, which will be 20% higher than last year's payment of ₹50.00 which covered the same period. This makes the dividend yield 0.7%, which is above the industry average.

See our latest analysis for Cera Sanitaryware

Cera Sanitaryware's Payment Has Solid Earnings Coverage

A big dividend yield for a few years doesn't mean much if it can't be sustained. However, Cera Sanitaryware's earnings easily cover the dividend. As a result, a large proportion of what it earned was being reinvested back into the business.

The next year is set to see EPS grow by 55.1%. If the dividend continues along recent trends, we estimate the payout ratio will be 25%, which is in the range that makes us comfortable with the sustainability of the dividend.

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NSEI:CERA Historic Dividend May 21st 2024

Cera Sanitaryware Has A Solid Track Record

Even over a long history of paying dividends, the company's distributions have been remarkably stable. The annual payment during the last 10 years was ₹4.00 in 2014, and the most recent fiscal year payment was ₹50.00. This works out to be a compound annual growth rate (CAGR) of approximately 29% a year over that time. So, dividends have been growing pretty quickly, and even more impressively, they haven't experienced any notable falls during this period.

The Dividend Looks Likely To Grow

The company's investors will be pleased to have been receiving dividend income for some time. We are encouraged to see that Cera Sanitaryware has grown earnings per share at 16% per year over the past five years. Growth in EPS bodes well for the dividend, as does the low payout ratio that the company is currently reporting.

We Really Like Cera Sanitaryware's Dividend

Overall, a dividend increase is always good, and we think that Cera Sanitaryware is a strong income stock thanks to its track record and growing earnings. Earnings are easily covering distributions, and the company is generating plenty of cash. Taking this all into consideration, this looks like it could be a good dividend opportunity.

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. Earnings growth generally bodes well for the future value of company dividend payments. See if the 5 Cera Sanitaryware analysts we track are forecasting continued growth with our free report on analyst estimates for the company. If you are a dividend investor, you might also want to look at our curated list of high yield 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.