Ion Exchange (India) (NSE:IONEXCHANG) Will Pay A Dividend Of ₹1.50

The board of Ion Exchange (India) Limited (NSE:IONEXCHANG) has announced that it will pay a dividend on the 9th of October, with investors receiving ₹1.50 per share. This means the annual payment will be 0.3% of the current stock price, which is lower than the industry average.

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Ion Exchange (India)'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. Based on the last payment, Ion Exchange (India) was earning enough to cover the dividend, but free cash flows weren't positive. 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.

Over the next year, EPS could expand by 6.9% if recent trends continue. Assuming the dividend continues along recent trends, we think the payout ratio could be 9.8% by next year, which is in a pretty sustainable range.

Check out our latest analysis for Ion Exchange (India)

Ion Exchange (India) Has A Solid Track Record

The company has an extended history of paying stable dividends. Since 2015, the dividend has gone from ₹0.20 total annually to ₹1.50. This works out to be a compound annual growth rate (CAGR) of approximately 22% a year over that time. So, dividends have been growing pretty quickly, and even more impressively, they haven't experienced any notable falls during this period.

Ion Exchange (India) Could Grow Its Dividend

Some investors will be chomping at the bit to buy some of the company's stock based on its dividend history. Ion Exchange (India) has seen EPS rising for the last three years, at 6.9% per annum. Growth in EPS bodes well for the dividend, as does the low payout ratio that the company is currently reporting.

Our Thoughts On Ion Exchange (India)'s Dividend

Overall, we don't think this company makes a great dividend stock, even though the dividend wasn't cut this year. While Ion Exchange (India) is earning enough to cover the payments, the cash flows are lacking. We don't think Ion Exchange (India) 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. As an example, we've identified 1 warning sign for Ion Exchange (India) 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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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.