Maharashtra Scooters' (NSE:MAHSCOOTER) Dividend Will Be ₹60.00

The board of Maharashtra Scooters Ltd. (NSE:MAHSCOOTER) has announced that it will pay a dividend on the 27th of July, with investors receiving ₹60.00 per share. This means the annual payment is 2.2% of the current stock price, which is above the average for the industry.

See our latest analysis for Maharashtra Scooters

Maharashtra Scooters Doesn't Earn Enough To Cover Its Payments

Impressive dividend yields are good, but this doesn't matter much if the payments can't be sustained. Before making this announcement, the company's dividend was higher than its profits, and made up 94% of cash flows. The company could be more focused on returning cash to shareholders, but this could indicate that growth opportunities are few and far between.

EPS is set to grow by 22.3% over the next year if recent trends continue. If the dividend continues on its recent course, the payout ratio in 12 months could be 96%, which is a bit high and could start applying pressure to the balance sheet.

Maharashtra Scooters Has A Solid Track Record

The company has an extended history of paying stable dividends. Since 2014, the annual payment back then was ₹20.00, compared to the most recent full-year payment of ₹170.00. This works out to be a compound annual growth rate (CAGR) of approximately 24% a year 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.

Maharashtra Scooters' Dividend Might Lack Growth

Investors who have held shares in the company for the past few years will be happy with the dividend income they have received. It's encouraging to see that Maharashtra Scooters has been growing its earnings per share at 22% a year over the past five years. Although earnings per share is up nicely Maharashtra Scooters is paying out 97% of its earnings as dividends, which we feel is borderline unsustainable without extenuating circumstances.

Our Thoughts On Maharashtra Scooters' Dividend

Overall, it's nice to see a consistent dividend payment, but we think that longer term, the current level of payment might be unsustainable. Although they have been consistent in the past, we think the payments are a little high to be sustained. Overall, we don't think this company has the makings of a good income stock.

Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. As an example, we've identified 1 warning sign for Maharashtra Scooters that you should be aware of before investing. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.

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