Prakash Pipes (NSE:PPL) Is Paying Out A Dividend Of ₹1.20

The board of Prakash Pipes Limited (NSE:PPL) has announced that it will pay a dividend of ₹1.20 per share on the 30th of October. This makes the dividend yield 0.7%, which will augment investor returns quite nicely.

View our latest analysis for Prakash Pipes

Prakash Pipes' Payment Has Solid Earnings Coverage

If the payments aren't sustainable, a high yield for a few years won't matter that much. However, Prakash Pipes' earnings easily cover the dividend. This means that most of its earnings are being retained to grow the business.

Looking forward, earnings per share could rise by 12.8% over the next year if the trend from the last few years continues. Assuming the dividend continues along recent trends, we think the payout ratio could be 4.2% by next year, which is in a pretty sustainable range.

Prakash Pipes Is Still Building Its Track Record

The company has maintained a consistent dividend for a few years now, but we would like to see a longer track record before relying on it. The most recent annual payment of ₹1.20 is about the same as the annual payment 3 years ago. We like that the dividend hasn't been shrinking. However we're conscious that the company hasn't got an overly long track record of dividend payments yet, which makes us wary of relying on its dividend income.

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. Prakash Pipes has impressed us by growing EPS at 13% per year over the past five years. With a decent amount of growth and a low payout ratio, we think this bodes well for Prakash Pipes' prospects of growing its dividend payments in the future.

We Really Like Prakash Pipes' Dividend

Overall, we like to see the dividend staying consistent, and we think Prakash Pipes might even raise payments in the future. Earnings are easily covering distributions, and the company is generating plenty of cash. All in all, this checks a lot of the boxes we look for when choosing an income stock.

Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. As an example, we've identified 3 warning signs for Prakash Pipes that you should be aware of before investing. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.

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