NIIT Learning Systems (NSE:NIITMTS) Has Announced That It Will Be Increasing Its Dividend To ₹3.00

NIIT Learning Systems Limited's (NSE:NIITMTS) dividend will be increasing from last year's payment of the same period to ₹3.00 on 24th of October. Even though the dividend went up, the yield is still quite low at only 0.9%.

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NIIT Learning Systems' Projected Earnings Seem Likely To Cover Future Distributions

While yield is important, another factor to consider about a company's dividend is whether the current payout levels are feasible. However, prior to this announcement, NIIT Learning Systems' dividend was comfortably covered by both cash flow and earnings. 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 19.0%. Assuming the dividend continues along recent trends, we think the payout ratio could be 16% by next year, which is in a pretty sustainable range.

See our latest analysis for NIIT Learning Systems

NIIT Learning Systems' Dividend Has Lacked Consistency

The track record isn't the longest, but we are already seeing a bit of instability in the payments. Since 2023, the annual payment back then was ₹5.00, compared to the most recent full-year payment of ₹3.00. This works out to a decline of approximately 40% over that time. A company that decreases its dividend over time generally isn't what we are looking for.

The Dividend Looks Likely To Grow

Given that the track record hasn't been stellar, we really want to see earnings per share growing over time. It's encouraging to see that NIIT Learning Systems has been growing its earnings per share at 20% a year over the past five years. With a decent amount of growth and a low payout ratio, we think this bodes well for NIIT Learning Systems' prospects of growing its dividend payments in the future.

NIIT Learning Systems 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. Earnings are easily covering distributions, and the company is generating plenty of cash. All of these factors considered, we think this has solid potential as a dividend stock.

Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. Taking the debate a bit further, we've identified 1 warning sign for NIIT Learning Systems that investors need to be conscious of moving forward. 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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