IRB Infrastructure Developers (NSE:IRB) Will Pay A Dividend Of ₹0.07

IRB Infrastructure Developers Limited (NSE:IRB) will pay a dividend of ₹0.07 on the 11th of December. However, the dividend yield of 0.6% still remains in a typical range for the industry.

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IRB Infrastructure Developers' Future Dividend Projections Appear Well Covered By Earnings

While it is always good to see a solid dividend yield, we should also consider whether the payment is feasible. However, prior to this announcement, IRB Infrastructure Developers' dividend was comfortably covered by both cash flow and earnings. This means that most of what the business earns is being used to help it grow.

EPS is set to fall by 77.3% over the next 12 months. Assuming the dividend continues along recent trends, we believe the payout ratio could be 9.3%, which we are pretty comfortable with and we think is feasible on an earnings basis.

Check out our latest analysis for IRB Infrastructure Developers

Dividend Volatility

Although the company has a long dividend history, it has been cut at least once in the last 10 years. Since 2015, the dividend has gone from ₹0.40 total annually to ₹0.27. Doing the maths, this is a decline of about 3.9% per year. Declining dividends isn't generally what we look for as they can indicate that the company is running into some challenges.

The Dividend Looks Likely To Grow

With a relatively unstable dividend, it's even more important to see if earnings per share is growing. IRB Infrastructure Developers has impressed us by growing EPS at 71% 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.

We Really Like IRB Infrastructure Developers' Dividend

Overall, we think that IRB Infrastructure Developers could be a great option for a dividend investment, although we would have preferred if the dividend wasn't cut this year. The cut will allow the company to continue paying out the dividend without putting the balance sheet under pressure, which means that it could remain sustainable for longer. Taking this all into consideration, this looks like it could be a good dividend opportunity.

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. Case in point: We've spotted 4 warning signs for IRB Infrastructure Developers (of which 2 don't sit too well with us!) you should know about. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.

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