PNC Infratech's (NSE:PNCINFRA) Dividend Will Be ₹0.60

PNC Infratech Limited (NSE:PNCINFRA) has announced that it will pay a dividend of ₹0.60 per share on the 29th of October. This payment means the dividend yield will be 0.2%, which is below the average for the industry.

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PNC Infratech's Future Dividend Projections Appear Well Covered By Earnings

While yield is important, another factor to consider about a company's dividend is whether the current payout levels are feasible. 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 14.6%. Assuming the dividend continues along recent trends, we think the payout ratio could be 2.1% by next year, which is in a pretty sustainable range.

View our latest analysis for PNC Infratech

PNC Infratech Has A Solid Track Record

The company has an extended history of paying stable dividends. The annual payment during the last 10 years was ₹0.30 in 2015, and the most recent fiscal year payment was ₹0.60. This works out to be a compound annual growth rate (CAGR) of approximately 7.2% a year 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

Investors could be attracted to the stock based on the quality of its payment history. PNC Infratech has impressed us by growing EPS at 7.7% per year over the past five years. 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.

In Summary

Overall, it's nice to see a consistent dividend payment, but we think that longer term, the current level of payment might be unsustainable. While PNC Infratech is earning enough to cover the payments, the cash flows are lacking. This company is not in the top tier of income providing stocks.

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. Just as an example, we've come across 2 warning signs for PNC Infratech you should be aware of, and 1 of them is concerning. 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.