PNC Infratech (NSE:PNCINFRA) Has Affirmed Its Dividend Of ₹0.60

The board of PNC Infratech Limited (NSE:PNCINFRA) has announced that it will pay a dividend on the 29th of October, with investors receiving ₹0.60 per share. Including this payment, the dividend yield on the stock will be 0.2%, which is a modest boost for shareholders' returns.

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PNC Infratech's Payment Could Potentially Have Solid Earnings Coverage

The dividend yield is a little bit low, but sustainability of the payments is also an important part of evaluating an income stock. Prior to this announcement, PNC Infratech's earnings easily covered the dividend, but free cash flows were negative. In general, we consider cash flow to be more important than earnings, so we would be cautious about relying on the sustainability of this dividend.

The next year is set to see EPS grow by 5.6%. If the dividend continues along recent trends, we estimate the payout ratio will be 2.3%, which is in the range that makes us comfortable with the sustainability of the dividend.

Check out our latest analysis for PNC Infratech

PNC Infratech Has A Solid Track Record

The company has a sustained record of paying dividends with very little fluctuation. Since 2015, the dividend has gone from ₹0.30 total annually to ₹0.60. This means that it has been growing its distributions at 7.2% per annum over that time. Companies like this can be very valuable over the long term, if the decent rate of growth can be maintained.

We Could See PNC Infratech's Dividend Growing

Some investors will be chomping at the bit to buy some of the company's stock based on its dividend history. PNC Infratech has seen EPS rising for the last five years, at 7.7% per annum. With a decent amount of growth and a low payout ratio, we think this bodes well for PNC Infratech's prospects of growing its dividend payments in the future.

Our Thoughts On PNC Infratech's Dividend

In summary, while it's good to see that the dividend hasn't been cut, we are a bit cautious about PNC Infratech's payments, as there could be some issues with sustaining them into the future. While the low payout ratio is a redeeming feature, this is offset by the minimal cash to cover the payments. We don't think PNC Infratech is a great stock to add to your portfolio if income is your focus.

Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. Case in point: We've spotted 2 warning signs for PNC Infratech (of which 1 is significant!) you should know about. Is PNC Infratech not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

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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.