Kokuyo Camlin (NSE:KOKUYOCMLN) Will Pay A Dividend Of ₹0.50

Kokuyo Camlin Limited (NSE:KOKUYOCMLN) will pay a dividend of ₹0.50 on the 5th of September. The dividend yield is 0.3% based on this payment, which is a little bit low compared to the other companies in the industry.

See our latest analysis for Kokuyo Camlin

Kokuyo Camlin's Payment Has Solid Earnings Coverage

Even a low dividend yield can be attractive if it is sustained for years on end. Kokuyo Camlin is quite easily earning enough to cover the dividend, however it is being let down by weak cash flows. With the company not bringing in any cash, paying out to shareholders is bound to become difficult at some point.

Over the next year, EPS could expand by 23.6% if recent trends continue. If the dividend continues along recent trends, we estimate the payout ratio will be 9.3%, which is in the range that makes us comfortable with the sustainability of the dividend.

Kokuyo Camlin Is Still Building Its Track Record

It's not possible for us to make a backward looking judgement just based on a short payment history. This doesn't mean that the company can't pay a good dividend, but just that we want to wait until it can prove itself.

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. It's encouraging to see that Kokuyo Camlin has been growing its earnings per share at 24% a year over the past five years. Earnings have been growing rapidly, and with a low payout ratio we think that the company could turn out to be a great dividend stock.

Our Thoughts On Kokuyo Camlin's Dividend

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 Kokuyo Camlin is earning enough to cover the payments, the cash flows are lacking. Overall, we don't think this company has the makings of a good income stock.

Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. For example, we've picked out 1 warning sign for Kokuyo Camlin that investors should know about before committing capital to this stock. Is Kokuyo Camlin 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.

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