Pilani Investment and Industries (NSE:PILANIINVS) Has Announced A Dividend Of ₹15.00

Pilani Investment and Industries Corporation Limited (NSE:PILANIINVS) has announced that it will pay a dividend of ₹15.00 per share on the 9th of October. This means the annual payment will be 0.9% of the current stock price, which is lower than the industry average.

Check out our latest analysis for Pilani Investment and Industries

Pilani Investment and Industries' Earnings Easily Cover The Distributions

If it is predictable over a long period, even low dividend yields can be attractive. Based on the last payment, Pilani Investment and Industries was earning enough to cover the dividend, but free cash flows weren't positive. In general, we consider cash flow to be more important than earnings, so we would be cautious about relying on the sustainability of this dividend.

Looking forward, earnings per share could rise by 37.7% over the next year if the trend from the last few years continues. If the dividend continues on this path, the payout ratio could be 5.5% by next year, which we think can be pretty sustainable going forward.

Pilani Investment and Industries Has A Solid Track Record

The company has been paying a dividend for a long time, and it has been quite stable which gives us confidence in the future dividend potential. Since 2012, the dividend has gone from ₹17.86 total annually to ₹15.00. The dividend has shrunk at around 1.7% a year during that period. A company that decreases its dividend over time generally isn't what we are looking for.

The Dividend Looks Likely To Grow

Investors could be attracted to the stock based on the quality of its payment history. Pilani Investment and Industries has seen EPS rising for the last five years, at 38% per annum. Rapid earnings growth and a low payout ratio suggest this company has been effectively reinvesting in its business. Should that continue, this company could have a bright future.

Our Thoughts On Pilani Investment and Industries' 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. While the low payout ratio is redeeming feature, this is offset by the minimal cash to cover the payments. We would probably look elsewhere for an income investment.

It's important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. However, there are other things to consider for investors when analysing stock performance. As an example, we've identified 1 warning sign for Pilani Investment and Industries that you should be aware of before investing. 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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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.