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

Kokuyo Camlin Limited's (NSE:KOKUYOCMLN) investors are due to receive a payment of ₹0.50 per share on 5th of September. This means the annual payment will be 0.3% of the current stock price, which is lower than the industry average.

Check out our latest analysis for Kokuyo Camlin

Kokuyo Camlin's Earnings Easily Cover The Distributions

Even a low dividend yield can be attractive if it is sustained for years on end. Based on the last payment, Kokuyo Camlin 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 23.6% if recent trends continue. Assuming the dividend continues along recent trends, we think the payout ratio could be 9.3% by next year, which is in a pretty sustainable range.

Kokuyo Camlin Is Still Building Its Track Record

The company hasn't been paying a dividend for very long at all, so we can't really make a judgement on how stable the dividend has been. 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

Some investors will be chomping at the bit to buy some of the company's stock based on its dividend history. 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 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.

In Summary

In summary, while it's good to see that the dividend hasn't been cut, we are a bit cautious about Kokuyo Camlin's payments, as there could be some issues with sustaining them into the future. While Kokuyo Camlin is earning enough to cover the payments, the cash flows are lacking. We don't think Kokuyo Camlin is a great stock to add to your portfolio if income is your focus.

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. As an example, we've identified 1 warning sign for Kokuyo Camlin 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.

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