Vaibhav Global (NSE:VAIBHAVGBL) Will Pay A Dividend Of ₹1.50

The board of Vaibhav Global Limited (NSE:VAIBHAVGBL) has announced that it will pay a dividend of ₹1.50 per share on the 4th of September. This means the annual payment is 2.5% of the current stock price, which is above the average for the industry.

Our free stock report includes 2 warning signs investors should be aware of before investing in Vaibhav Global. Read for free now.

Vaibhav Global's Payment Could Potentially Have Solid Earnings Coverage

If the payments aren't sustainable, a high yield for a few years won't matter that much. Prior to this announcement, Vaibhav Global was paying out 71% of earnings and more than 75% of free cash flows. This indicates that the company is more focused on returning cash to shareholders than growing the business, but we don't think that there are necessarily signs that the dividend might be unsustainable.

Looking forward, could fall by 4.7% if the company can't turn things around from the last few years. If recent patterns in the dividend continue, we could see the payout ratio reaching 79% in the next 12 months which is on the higher end of the range we would say is sustainable.

View our latest analysis for Vaibhav Global

Dividend Volatility

The company's dividend history has been marked by instability, with at least one cut in the last 10 years. Since 2015, the annual payment back then was ₹1.16, compared to the most recent full-year payment of ₹6.00. This implies that the company grew its distributions at a yearly rate of about 18% over that duration. Dividends have grown rapidly over this time, but with cuts in the past we are not certain that this stock will be a reliable source of income in the future.

Dividend Growth May Be Hard To Achieve

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. Vaibhav Global has seen earnings per share falling at 4.7% per year over the last five years. A modest decline in earnings isn't great, and it makes it quite unlikely that the dividend will grow in the future unless that trend can be reversed.

In Summary

Overall, we don't think this company makes a great dividend stock, even though the dividend wasn't cut this year. The low payout ratio is a redeeming feature, but generally we are not too happy with the payments Vaibhav Global has been making. We don't think Vaibhav Global is a great stock to add to your portfolio if income is your focus.

It's important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. To that end, Vaibhav Global has 2 warning signs (and 1 which can't be ignored) we think you should know about. Is Vaibhav Global not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

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