Superhouse (NSE:SUPERHOUSE) Is Due To Pay A Dividend Of ₹1.00

Superhouse Limited (NSE:SUPERHOUSE) has announced that it will pay a dividend of ₹1.00 per share on the 30th of October. This means the dividend yield will be fairly typical at 0.5%.

See our latest analysis for Superhouse

Superhouse's Earnings Easily Cover The Distributions

We aren't too impressed by dividend yields unless they can be sustained over time. Superhouse is quite easily earning enough to cover the dividend, however it is being let down by weak cash flows. We think that cash flows should take priority over earnings, so this is definitely a worry for the dividend going forward.

If the trend of the last few years continues, EPS will grow by 5.6% over the next 12 months. If the dividend continues on this path, the payout ratio could be 4.3% by next year, which we think can be pretty sustainable going forward.

Dividend Volatility

While the company has been paying a dividend for a long time, it has cut the dividend at least once in the last 10 years. The annual payment during the last 10 years was ₹1.50 in 2013, and the most recent fiscal year payment was ₹1.00. The dividend has shrunk at around 4.0% a year during that period. A company that decreases its dividend over time generally isn't what we are looking for.

We Could See Superhouse's Dividend Growing

Given that the dividend has been cut in the past, we need to check if earnings are growing and if that might lead to stronger dividends in the future. Superhouse has impressed us by growing EPS at 5.6% per year over the past five years. With a decent amount of growth and a low payout ratio, we think this bodes well for Superhouse's prospects of growing its dividend payments in the future.

In Summary

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 the low payout ratio is a redeeming feature, this is offset by the minimal cash to cover the payments. We would be a touch cautious of relying on this stock primarily for the dividend income.

Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. However, there are other things to consider for investors when analysing stock performance. For instance, we've picked out 3 warning signs for Superhouse that investors should take into consideration. Is Superhouse 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.