IndiaMART InterMESH (NSE:INDIAMART) Has Announced That It Will Be Increasing Its Dividend To ₹50.00

IndiaMART InterMESH Limited's (NSE:INDIAMART) dividend will be increasing from last year's payment of the same period to ₹50.00 on 16th of July. This will take the annual payment to 1.3% of the stock price, which is above what most companies in the industry pay.

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IndiaMART InterMESH's Projected Earnings Seem Likely To Cover Future Distributions

A big dividend yield for a few years doesn't mean much if it can't be sustained. However, IndiaMART InterMESH's earnings easily cover the dividend. This means that most of its earnings are being retained to grow the business.

Looking forward, earnings per share is forecast to rise by 15.3% over the next year. Assuming the dividend continues along recent trends, we think the payout ratio could be 69% by next year, which is in a pretty sustainable range.

View our latest analysis for IndiaMART InterMESH

IndiaMART InterMESH's Dividend Has Lacked Consistency

It's comforting to see that IndiaMART InterMESH has been paying a dividend for a number of years now, however it has been cut at least once in that time. This suggests that the dividend might not be the most reliable. The dividend has gone from an annual total of ₹5.00 in 2020 to the most recent total annual payment of ₹30.00. This means that it has been growing its distributions at 43% per annum over that time. Despite the rapid growth in the dividend over the past number of years, we have seen the payments go down the past as well, so that makes us cautious.

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 that IndiaMART InterMESH has been growing its earnings per share at 29% a year over the past five years. Earnings have been growing rapidly, and with a low payout ratio we think that the company could turn out to be a great dividend stock.

We Really Like IndiaMART InterMESH's Dividend

Overall, a dividend increase is always good, and we think that IndiaMART InterMESH 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 of these factors considered, we think this has solid potential as a dividend stock.

Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. However, there are other things to consider for investors when analysing stock performance. Taking the debate a bit further, we've identified 2 warning signs for IndiaMART InterMESH that investors need to be conscious of moving forward. Is IndiaMART InterMESH not quite the opportunity you were looking for? Why not check out our selection of top 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.