EIH Associated Hotels (NSE:EIHAHOTELS) Is Increasing Its Dividend To ₹6.00

EIH Associated Hotels Limited (NSE:EIHAHOTELS) will increase its dividend from last year's comparable payment on the 31st of August to ₹6.00. This takes the dividend yield to 0.6%, which shareholders will be pleased with.

View our latest analysis for EIH Associated Hotels

EIH Associated Hotels' Earnings Easily Cover The Distributions

A big dividend yield for a few years doesn't mean much if it can't be sustained. Before making this announcement, EIH Associated Hotels was easily earning enough to cover the dividend. This means that most of its earnings are being retained to grow the business.

Over the next year, EPS could expand by 16.4% if recent trends continue. If the dividend continues along recent trends, we estimate the payout ratio will be 21%, which is in the range that makes us comfortable with the sustainability of the dividend.

Dividend Volatility

Although the company has a long dividend history, it has been cut at least once in the last 10 years. Since 2014, the dividend has gone from ₹1.00 total annually to ₹6.00. This means that it has been growing its distributions at 20% per annum over that time. Despite the rapid growth in the dividend over the past number of years, we have seen the payments go down the past as well, so that makes us cautious.

The Dividend Looks Likely To Grow

With a relatively unstable dividend, it's even more important to evaluate if earnings per share is growing, which could point to a growing dividend in the future. EIH Associated Hotels has impressed us by growing EPS at 16% per year over the past five years. With a decent amount of growth and a low payout ratio, we think this bodes well for EIH Associated Hotels' prospects of growing its dividend payments in the future.

EIH Associated Hotels Looks Like A Great Dividend Stock

Overall, we think this could be an attractive income stock, and it is only getting better by paying a higher dividend this year. Distributions are quite easily covered by earnings, which are also being converted to cash flows. All in all, this checks a lot of the boxes we look for when choosing an income stock.

Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. For instance, we've picked out 1 warning sign for EIH Associated Hotels that investors should take into consideration. If you are a dividend investor, you might also want to look at our curated list of high yield dividend stocks.

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