J. Kumar Infraprojects (NSE:JKIL) Will Pay A Smaller Dividend Than Last Year

J. Kumar Infraprojects Limited's (NSE:JKIL) dividend is being reduced to ₹1.00 on the 21st of October. Based on this payment, the dividend yield will be 0.5%, which is lower than the average for the industry.

See our latest analysis for J. Kumar Infraprojects

J. Kumar Infraprojects' Dividend Is Well Covered By Earnings

The dividend yield is a little bit low, but sustainability of the payments is also an important part of evaluating an income stock. However, J. Kumar Infraprojects' earnings easily cover the dividend. This means that most of what the business earns is being used to help it grow.

If the trend of the last few years continues, EPS will grow by 0.7% over the next 12 months. Assuming the dividend continues along recent trends, we think the payout ratio could be 5.9% 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 dividend has gone from ₹1.13 in 2011 to the most recent annual payment of ₹1.00. Doing the maths, this is a decline of about 1.2% per year. A company that decreases its dividend over time generally isn't what we are looking for.

J. Kumar Infraprojects May Find It Hard To Grow The Dividend

Growing earnings per share could be a mitigating factor when considering the past fluctuations in the dividend. Although it's important to note that J. Kumar Infraprojects' earnings per share has basically not grown from where it was five years ago, which could erode the purchasing power of the dividend over time. If J. Kumar Infraprojects is struggling to find viable investments, it always has the option to increase its payout ratio to pay more to shareholders.

Our Thoughts On J. Kumar Infraprojects' Dividend

Even though the dividend was cut this year, we think J. Kumar Infraprojects has the ability to make consistent payments in the future. The payout ratio looks good, but unfortunately the company's dividend track record isn't stellar. The dividend looks okay, but there have been some issues in the past, so we would be a little bit cautious.

Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. Taking the debate a bit further, we've identified 1 warning sign for J. Kumar Infraprojects that investors need to be conscious of moving forward. If you are a dividend investor, you might also want to look at our curated list of high performing dividend stock.

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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.
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