CRISIL (NSE:CRISIL) Is Increasing Its Dividend To ₹23.00

CRISIL Limited (NSE:CRISIL) has announced that it will be increasing its dividend from last year's comparable payment on the 18th of May to ₹23.00. Even though the dividend went up, the yield is still quite low at only 1.5%.

Check out our latest analysis for CRISIL

CRISIL's Payment Has Solid Earnings Coverage

If it is predictable over a long period, even low dividend yields can be attractive. Based on the last dividend, CRISIL is earning enough to cover the payment, but then it makes up 121% of cash flows. The company might be more focused on returning cash to shareholders, but paying out this much of its cash flow could expose the dividend to being cut in the future.

Over the next year, EPS is forecast to expand by 29.1%. If the dividend continues along recent trends, we estimate the payout ratio will be 51%, which is in the range that makes us comfortable with the sustainability of the dividend.

CRISIL Has A Solid Track Record

The company has an extended history of paying stable dividends. Since 2013, the annual payment back then was ₹12.00, compared to the most recent full-year payment of ₹48.00. This means that it has been growing its distributions at 15% per annum over that time. We can see that payments have shown some very nice upward momentum without faltering, which provides some reassurance that future payments will also be reliable.

The Dividend Looks Likely To Grow

Some investors will be chomping at the bit to buy some of the company's stock based on its dividend history. CRISIL has impressed us by growing EPS at 11% per year over the past five years. While on an earnings basis, this company looks appealing as an income stock, the cash payout ratio still makes us cautious.

Our Thoughts On CRISIL's Dividend

Overall, we always like to see the dividend being raised, but we don't think CRISIL will make a great income stock. While CRISIL is earning enough to cover the payments, the cash flows are lacking. We would probably look elsewhere for an income investment.

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 example, we've picked out 1 warning sign for CRISIL that investors should know about before committing capital to this stock. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.

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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.