TTK Prestige (NSE:TTKPRESTIG) Is Paying Out A Larger Dividend Than Last Year

TTK Prestige Limited (NSE:TTKPRESTIG) has announced that it will be increasing its dividend from last year's comparable payment on the 26th of August to ₹6.00. This takes the dividend yield to 0.8%, which shareholders will be pleased with.

Check out our latest analysis for TTK Prestige

TTK Prestige's Earnings Easily Cover The Distributions

Impressive dividend yields are good, but this doesn't matter much if the payments can't be sustained. Before making this announcement, TTK Prestige 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 is forecast to expand by 57.1%. Assuming the dividend continues along recent trends, we think the payout ratio could be 24% by next year, which is in a pretty sustainable range.

Dividend Volatility

Although the company has a long dividend history, it has been cut at least once in the last 10 years. The dividend has gone from an annual total of ₹1.46 in 2013 to the most recent total annual payment of ₹6.00. This works out to be a compound annual growth rate (CAGR) of approximately 15% a year over that time. TTK Prestige has grown distributions at a rapid rate despite cutting the dividend at least once in the past. Companies that cut once often cut again, so we would be cautious about buying this stock solely for the dividend income.

Dividend Growth May Be Hard To Achieve

With a relatively unstable dividend, it's even more important to see if earnings per share is growing. Although it's important to note that TTK Prestige'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.

In Summary

In summary, while it's always good to see the dividend being raised, we don't think TTK Prestige's payments are rock solid. The company is generating plenty of cash, which could maintain the dividend for a while, but the track record hasn't been great. We don't think TTK Prestige is a great stock to add to your portfolio if income is your focus.

Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. However, there are other things to consider for investors when analysing stock performance. Taking the debate a bit further, we've identified 1 warning sign for TTK Prestige that investors need to be conscious of moving forward. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.

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