Mallcom (India) (NSE:MALLCOM) Will Pay A Dividend Of ₹3.00

The board of Mallcom (India) Limited (NSE:MALLCOM) has announced that it will pay a dividend of ₹3.00 per share on the 11th of October. This payment means the dividend yield will be 0.3%, which is below the average for the industry.

See our latest analysis for Mallcom (India)

Mallcom (India)'s Earnings Easily Cover The Distributions

If it is predictable over a long period, even low dividend yields can be attractive. However, Mallcom (India)'s earnings easily cover the dividend. This means that most of what the business earns is being used to help it grow.

If the trend of the last few years continues, EPS will grow by 35.1% over the next 12 months. If the dividend continues along recent trends, we estimate the payout ratio will be 4.0%, which is in the range that makes us comfortable with the sustainability of the dividend.

Mallcom (India) Doesn't Have A Long Payment History

The dividend's track record has been pretty solid, but with only 7 years of history we want to see a few more years of history before making any solid conclusions. Since 2016, the dividend has gone from ₹2.00 total annually to ₹3.00. This implies that the company grew its distributions at a yearly rate of about 6.0% over that duration. Mallcom (India) has been growing its dividend at a decent rate, and the payments have been stable. However, the payment history is very short, so there is no evidence yet that the dividend can be sustained over a full economic cycle.

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 Mallcom (India) has been growing its earnings per share at 35% 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.

We Really Like Mallcom (India)'s Dividend

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. Taking this all into consideration, this looks like it could be a good dividend opportunity.

It's important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. Taking the debate a bit further, we've identified 1 warning sign for Mallcom (India) that investors need to be conscious of moving forward. Is Mallcom (India) 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.