International Conveyors' (NSE:INTLCONV) Dividend Is Being Reduced To ₹0.75

International Conveyors Limited (NSE:INTLCONV) has announced that on 24th of October, it will be paying a dividend of₹0.75, which a reduction from last year's comparable dividend. The dividend yield of 0.8% is still a nice boost to shareholder returns, despite the cut.

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International Conveyors' 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, International Conveyors' earnings easily cover the dividend. This means that most of its earnings are being retained to grow the business.

Looking forward, earnings per share could rise by 76.7% over the next year if the trend from the last few years continues. Assuming the dividend continues along recent trends, we think the payout ratio could be 3.0% by next year, which is in a pretty sustainable range.

View our latest analysis for International Conveyors

Dividend Volatility

The company has a long dividend track record, but it doesn't look great with cuts in the past. The dividend has gone from an annual total of ₹0.25 in 2015 to the most recent total annual payment of ₹0.75. This works out to be a compound annual growth rate (CAGR) of approximately 12% a year over that time. International Conveyors has grown distributions at a rapid rate despite cutting the dividend at least once in the past. Companies that cut once often cut again, so we would be cautious about buying this stock solely for the dividend income.

The Dividend Looks Likely To Grow

Growing earnings per share could be a mitigating factor when considering the past fluctuations in the dividend. We are encouraged to see that International Conveyors has grown earnings per share at 77% per year over the past five years. A low payout ratio gives the company a lot of flexibility, and growing earnings also make it very easy for it to grow the dividend.

International Conveyors Looks Like A Great Dividend Stock

In general, we don't like to see the dividend being cut, especially when the company has such high potential like International Conveyors does. Reducing the amount it is paying as a dividend can protect the company's balance sheet, keeping the dividend sustainable for longer. 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. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. For instance, we've picked out 2 warning signs for International Conveyors that investors should take into consideration. Looking for more high-yielding dividend ideas? Try our collection 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.