J. Kumar Infraprojects (NSE:JKIL) Is Increasing Its Dividend To ₹3.00

J. Kumar Infraprojects Limited's (NSE:JKIL) dividend will be increasing from last year's payment of the same period to ₹3.00 on 20th of October. This makes the dividend yield about the same as the industry average at 1.0%.

Check out our latest analysis for J. Kumar Infraprojects

J. Kumar Infraprojects' Dividend Is Well Covered By Earnings

We like to see a healthy dividend yield, but that is only helpful to us if the payment can continue. Before making this announcement, J. Kumar Infraprojects was easily earning enough to cover the dividend. As a result, a large proportion of what it earned was being reinvested back into the business.

If the trend of the last few years continues, EPS will grow by 18.6% over the next 12 months. Assuming the dividend continues along recent trends, we think the payout ratio could be 8.1% by next year, which is in a pretty sustainable range.

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 ₹1.13 in 2012, and the most recent fiscal year payment was ₹3.00. This implies that the company grew its distributions at a yearly rate of about 10% over that duration. J. Kumar Infraprojects 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

With a relatively unstable dividend, it's even more important to see if earnings per share is growing. J. Kumar Infraprojects has seen EPS rising for the last five years, at 19% per annum. Growth in EPS bodes well for the dividend, as does the low payout ratio that the company is currently reporting.

We Really Like J. Kumar Infraprojects' Dividend

In summary, it is always positive to see the dividend being increased, and we are particularly pleased with its overall sustainability. 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. Taking this all into consideration, this looks like it could be a good dividend opportunity.

Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. However, there are other things to consider for investors when analysing stock performance. For example, we've picked out 1 warning sign for J. Kumar Infraprojects that investors should know about before committing capital to this stock. Is J. Kumar Infraprojects not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

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