Swelect Energy Systems (NSE:SWELECTES) Is Paying Out A Dividend Of ₹3.00

Swelect Energy Systems Limited (NSE:SWELECTES) has announced that it will pay a dividend of ₹3.00 per share on the 8th of August. This means the annual payment is 1.0% of the current stock price, which is above the average for the industry.

See our latest analysis for Swelect Energy Systems

Swelect Energy Systems' Dividend Is Well Covered By Earnings

Impressive dividend yields are good, but this doesn't matter much if the payments can't be sustained. However, prior to this announcement, Swelect Energy Systems' dividend was comfortably covered by both cash flow and earnings. As a result, a large proportion of what it earned was being reinvested back into the business.

If the trend of the last few years continues, EPS will grow by 8.4% over the next 12 months. Assuming the dividend continues along recent trends, we think the payout ratio could be 13% 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. Since 2012, the annual payment back then was ₹80.00, compared to the most recent full-year payment of ₹3.00. This works out to a decline of approximately 96% over that time. A company that decreases its dividend over time generally isn't what we are looking for.

We Could See Swelect Energy Systems' Dividend Growing

With a relatively unstable dividend, and a poor history of shrinking dividends, it's even more important to see if EPS is growing. It's encouraging to see that Swelect Energy Systems has been growing its earnings per share at 8.4% a year over the past five years. Swelect Energy Systems definitely has the potential to grow its dividend in the future with earnings on an uptrend and a low payout ratio.

Swelect Energy Systems Looks Like A Great Dividend Stock

In summary, it is good to see that the dividend is staying consistent, and we don't think there is any reason to suspect this might change over the medium term. The company is easily earning enough to cover its dividend payments and it is great to see that these earnings are being translated into cash flow. All in all, this checks a lot of the boxes we look for when choosing an income stock.

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 4 warning signs for Swelect Energy Systems you should be aware of, and 1 of them is significant. Is Swelect Energy Systems not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.