Pashupati Cotspin (NSE:PASHUPATI) Has Announced A Dividend Of ₹0.75

Pashupati Cotspin Limited (NSE:PASHUPATI) will pay a dividend of ₹0.75 on the 30th of October. The dividend yield is 0.2% based on this payment, which is a little bit low compared to the other companies in the industry.

While the dividend yield is important for income investors, it is also important to consider any large share price moves, as this will generally outweigh any gains from distributions. Investors will be pleased to see that Pashupati Cotspin's stock price has increased by 49% in the last 3 months, which is good for shareholders and can also explain a decrease in the dividend yield.

View our latest analysis for Pashupati Cotspin

Pashupati Cotspin's Projected Earnings Seem Likely To Cover Future Distributions

Even a low dividend yield can be attractive if it is sustained for years on end. Before making this announcement, Pashupati Cotspin was easily earning enough to cover the dividend. As a result, a large proportion of what it earned was being reinvested back into the business.

Over the next year, EPS could expand by 1.9% if recent trends continue. Assuming the dividend continues along recent trends, we think the payout ratio could be 12% by next year, which is in a pretty sustainable range.

Pashupati Cotspin Is Still Building Its Track Record

It is great to see that Pashupati Cotspin has been paying a stable dividend for a number of years now, however we want to be a bit cautious about whether this will remain true through a full economic cycle. The dividend has gone from an annual total of ₹0.50 in 2019 to the most recent total annual payment of ₹0.75. This works out to be a compound annual growth rate (CAGR) of approximately 8.4% a year over that time. Investors will likely want to see a longer track record of growth before making decision to add this to their income portfolio.

Pashupati Cotspin May Find It Hard To Grow The Dividend

Investors could be attracted to the stock based on the quality of its payment history. Although it's important to note that Pashupati Cotspin's earnings per share has basically not grown from where it was five years ago, which could erode the purchasing power of the dividend over time. While growth may be thin on the ground, Pashupati Cotspin could always pay out a higher proportion of earnings to increase shareholder returns.

Our Thoughts On Pashupati Cotspin's Dividend

In summary, we are pleased with the dividend remaining consistent, and we think there is a good chance of this continuing in the future. The dividend has been at reasonable levels historically, but that hasn't translated into a consistent payment. The payment isn't stellar, but it could make a decent addition to a dividend portfolio.

It's important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. However, there are other things to consider for investors when analysing stock performance. To that end, Pashupati Cotspin has 2 warning signs (and 1 which doesn't sit too well with us) we think you should know about. Is Pashupati Cotspin not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

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