Ingersoll-Rand (India) (NSE:INGERRAND) Has Affirmed Its Dividend Of ₹20.00

Ingersoll-Rand (India) Limited (NSE:INGERRAND) will pay a dividend of ₹20.00 on the 21st of August. This means the annual payment will be 0.5% of the current stock price, which is lower than the industry average.

Check out our latest analysis for Ingersoll-Rand (India)

Ingersoll-Rand (India) Is Paying Out More Than It Is Earning

Even a low dividend yield can be attractive if it is sustained for years on end. Prior to this announcement, Ingersoll-Rand (India)'s dividend was comfortably covered by both cash flow and earnings. This indicates that quite a large proportion of earnings is being invested back into the business.

Over the next year, EPS could expand by 11.8% if the company continues along the path it has been on recently. Assuming the dividend continues along recent trends, we think the payout ratio could reach 98%, which probably can't continue without starting to put some pressure on the balance sheet.

Dividend Volatility

While the company has been paying a dividend for a long time, it has cut the dividend at least once in the last 10 years. The annual payment during the last 10 years was ₹6.00 in 2013, and the most recent fiscal year payment was ₹14.00. This means that it has been growing its distributions at 8.8% per annum over that time. We have seen cuts in the past, so while the growth looks promising we would be a little bit cautious about its track record.

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. Ingersoll-Rand (India) has seen EPS rising for the last five years, at 12% per annum. The company is paying out a lot of its cash as a dividend, but it looks okay based on the payout ratio.

We Really Like Ingersoll-Rand (India)'s Dividend

Overall, we like to see the dividend staying consistent, and we think Ingersoll-Rand (India) might even raise payments in the future. The company is easily earning enough to cover its dividend payments and it is great to see that these earnings are being translated into cash flow. All of these factors considered, we think this has solid potential as a dividend stock.

Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. As an example, we've identified 1 warning sign for Ingersoll-Rand (India) that you should be aware of before investing. 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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