Crompton Greaves Consumer Electricals' (NSE:CROMPTON) Dividend Will Be ₹2.50

Crompton Greaves Consumer Electricals Limited's (NSE:CROMPTON) investors are due to receive a payment of ₹2.50 per share on 21st of August. The dividend yield will be 0.8% based on this payment which is still above the industry average.

View our latest analysis for Crompton Greaves Consumer Electricals

Crompton Greaves Consumer Electricals' Payment Has Solid Earnings Coverage

Impressive dividend yields are good, but this doesn't matter much if the payments can't be sustained. However, Crompton Greaves Consumer Electricals' earnings easily cover the dividend. This means that most of its earnings are being retained to grow the business.

Looking forward, earnings per share is forecast to rise by 10.6% over the next year. Assuming the dividend continues along recent trends, we think the payout ratio could be 28% by next year, which is in a pretty sustainable range.

Crompton Greaves Consumer Electricals' Dividend Has Lacked Consistency

Even in its relatively short history, the company has reduced the dividend at least once. Due to this, we are a little bit cautious about the dividend consistency over a full economic cycle. The first annual payment during the last 5 years was ₹1.50 in 2017, and the most recent fiscal year payment was ₹2.50. This means that it has been growing its distributions at 11% per annum over that time. It is great to see strong growth in the dividend payments, but cuts are concerning as it may indicate the payout policy is too ambitious.

The Dividend Looks Likely To Grow

With a relatively unstable dividend, it's even more important to see if earnings per share is growing. Crompton Greaves Consumer Electricals has impressed us by growing EPS at 15% per year over the past five years. With a decent amount of growth and a low payout ratio, we think this bodes well for Crompton Greaves Consumer Electricals' prospects of growing its dividend payments in the future.

We Really Like Crompton Greaves Consumer Electricals' 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. Earnings are easily covering distributions, and the company is generating plenty of cash. All of these factors considered, we think this has solid potential as a dividend 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. For example, we've picked out 3 warning signs for Crompton Greaves Consumer Electricals that investors should know about before committing capital to this stock. Is Crompton Greaves Consumer Electricals 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.