Stock Analysis

Everest Industries (NSE:EVERESTIND) Is Increasing Its Dividend To ₹7.50

NSEI:EVERESTIND
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Everest Industries Limited's (NSE:EVERESTIND) dividend will be increasing on the 24th of September to ₹7.50, with investors receiving 650% more than last year. This makes the dividend yield 1.9%, which is above the industry average.

While the dividend yield is important for income investors, it is also important to consider any large share price moves, as this will generally outweigh any gains from distributions. Investors will be pleased to see that Everest Industries' stock price has increased by 35% in the last 3 months, which is good for shareholders and can also explain a decrease in the dividend yield.

See our latest analysis for Everest Industries

Everest Industries' Payment Has Solid Earnings Coverage

We like to see robust dividend yields, but that doesn't matter if the payment isn't sustainable. However, Everest Industries' earnings easily cover the dividend. This means that most of what the business earns is being used to help it grow.

Over the next year, EPS could expand by 10.0% if recent trends continue. Assuming the dividend continues along recent trends, we think the payout ratio could be 20% by next year, which is in a pretty sustainable range.

historic-dividend
NSEI:EVERESTIND Historic Dividend July 12th 2021

Dividend Volatility

The company has a long dividend track record, but it doesn't look great with cuts in the past. Since 2011, the dividend has gone from ₹4.50 to ₹1.00. Dividend payments have fallen sharply, down 78% over that time. Generally, we don't like to see a dividend that has been declining over time as this can degrade shareholders' returns and indicate that the company may be running into problems.

The Dividend Has Growth Potential

With a relatively unstable dividend, and a poor history of shrinking dividends, it's even more important to see if EPS is growing. Everest Industries has impressed us by growing EPS at 10.0% per year over the past five years. With a decent amount of growth and a low payout ratio, we think this bodes well for Everest Industries' prospects of growing its dividend payments in the future.

Everest Industries Looks Like A Great Dividend Stock

Overall, a dividend increase is always good, and we think that Everest Industries 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. All in all, this checks a lot of the boxes we look for when choosing an income stock.

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. For instance, we've picked out 2 warning signs for Everest Industries that investors should take into consideration. Looking for more high-yielding dividend ideas? Try our curated list of strong dividend payers.

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