PNC Infratech's (NSE:PNCINFRA) Upcoming Dividend Will Be Larger Than Last Year's

PNC Infratech Limited (NSE:PNCINFRA) will increase its dividend from last year's comparable payment on the 28th of October to ₹0.60. Despite this raise, the dividend yield of 0.1% is only a modest boost to shareholder returns.

View our latest analysis for PNC Infratech

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

Even a low dividend yield can be attractive if it is sustained for years on end. PNC Infratech is quite easily earning enough to cover the dividend, however it is being let down by weak cash flows. We think that cash flows should take priority over earnings, so this is definitely a worry for the dividend going forward.

EPS is set to fall by 40.1% over the next 12 months. If the dividend continues along the path it has been on recently, we estimate the payout ratio could be 2.1%, which is comfortable for the company to continue in the future.

PNC Infratech Is Still Building Its Track Record

PNC Infratech's dividend has been pretty stable for a little while now, but we will continue to be cautious until it has been demonstrated for a few more years. The annual payment during the last 9 years was ₹0.30 in 2015, and the most recent fiscal year payment was ₹0.60. This implies that the company grew its distributions at a yearly rate of about 8.0% over that duration. PNC Infratech has been growing its dividend at a decent rate, and the payments have been stable. However, the payment history is very short, so there is no evidence yet that the dividend can be sustained over a full economic cycle.

The Dividend Looks Likely To Grow

Investors who have held shares in the company for the past few years will be happy with the dividend income they have received. PNC Infratech has impressed us by growing EPS at 26% 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.

Our Thoughts On PNC Infratech's Dividend

Overall, we always like to see the dividend being raised, but we don't think PNC Infratech will make a great income stock. While PNC Infratech is earning enough to cover the payments, the cash flows are lacking. 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. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. For example, we've picked out 2 warning signs for PNC Infratech that investors should know about before committing capital to this stock. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.

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