IndiaMART InterMESH (NSE:INDIAMART) Is Paying Out A Larger Dividend Than Last Year

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

If the payments aren't sustainable, a high yield for a few years won't matter that much. However, IndiaMART InterMESH's earnings easily cover the dividend. This means that most of its earnings are being retained to grow the business.

The next year is set to see EPS grow by 15.3%. If the dividend continues along recent trends, we estimate the payout ratio will be 69%, which is in the range that makes us comfortable with the sustainability of the dividend.

See our latest analysis for IndiaMART InterMESH

IndiaMART InterMESH's Dividend Has Lacked Consistency

Looking back, IndiaMART InterMESH's dividend hasn't been particularly consistent. This makes us cautious about the consistency of the dividend over a full economic cycle. The dividend has gone from an annual total of ₹5.00 in 2020 to the most recent total annual payment of ₹30.00. This works out to be a compound annual growth rate (CAGR) of approximately 43% a year over that time. Dividends have grown rapidly over this time, but with cuts in the past we are not certain that this stock will be a reliable source of income in the future.

The Dividend Looks Likely To Grow

Given that the dividend has been cut in the past, we need to check if earnings are growing and if that might lead to stronger dividends in the future. We are encouraged to see that IndiaMART InterMESH has grown earnings per share at 29% per year over the past five years. Earnings per share is growing at a solid clip, and the payout ratio is low which we think is an ideal combination in a dividend stock as the company can quite easily raise the dividend in the future.

IndiaMART InterMESH Looks Like A Great Dividend Stock

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. Distributions are quite easily covered by earnings, which are also being converted to cash flows. 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. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. As an example, we've identified 2 warning signs for IndiaMART InterMESH that you should be aware of before investing. 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.