Dilip Buildcon (NSE:DBL) Has Announced A Dividend Of ₹1.00

Dilip Buildcon Limited's (NSE:DBL) investors are due to receive a payment of ₹1.00 per share on 30th of October. Including this payment, the dividend yield on the stock will be 0.2%, which is a modest boost for shareholders' returns.

View our latest analysis for Dilip Buildcon

Dilip Buildcon's Dividend Is 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. Dilip Buildcon is quite easily earning enough to cover the dividend, however it is being let down by weak cash flows. In general, we consider cash flow to be more important than earnings, so we would be cautious about relying on the sustainability of this dividend.

Over the next year, EPS could expand by 10.2% if recent trends continue. Assuming the dividend continues along recent trends, we think the payout ratio could be 3.4% by next year, which is in a pretty sustainable range.

Dilip Buildcon Is Still Building Its Track Record

The company has maintained a consistent dividend for a few years now, but we would like to see a longer track record before relying on it. The most recent annual payment of ₹1.00 is about the same as the first annual payment 4 years ago. Dilip Buildcon hasn't been paying a dividend for very long, so we wouldn't get to excited about its record of growth just yet.

The Dividend Looks Likely To Grow

Some investors will be chomping at the bit to buy some of the company's stock based on its dividend history. We are encouraged to see that Dilip Buildcon has grown earnings per share at 10% 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.

Our Thoughts On Dilip Buildcon's Dividend

In summary, while it's good to see that the dividend hasn't been cut, we are a bit cautious about Dilip Buildcon's payments, as there could be some issues with sustaining them into the future. While Dilip Buildcon is earning enough to cover the payments, the cash flows are lacking. We don't think Dilip Buildcon is a great stock to add to your portfolio if income is your focus.

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. To that end, Dilip Buildcon has 3 warning signs (and 2 which are significant) we think you should know about. Looking for more high-yielding dividend ideas? Try our curated list of strong dividend payers.

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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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