Share India Securities' (NSE:SHAREINDIA) Shareholders Will Receive A Bigger Dividend Than Last Year

The board of Share India Securities Limited (NSE:SHAREINDIA) has announced that it will be paying its dividend of ₹2.00 on the 17th of August, an increased payment from last year's comparable dividend. Despite this raise, the dividend yield of 0.7% is only a modest boost to shareholder returns.

See our latest analysis for Share India Securities

Share India Securities' Payment Has Solid Earnings Coverage

If it is predictable over a long period, even low dividend yields can be attractive. Before making this announcement, Share India Securities was easily earning enough to cover the dividend. This means that most of its earnings are being retained to grow the business.

If the trend of the last few years continues, EPS will grow by 75.0% over the next 12 months. If the dividend continues on this path, the payout ratio could be 4.2% by next year, which we think can be pretty sustainable going forward.

Share India Securities' Dividend Has Lacked Consistency

Even in its short history, we have seen the dividend cut. The dividend has gone from an annual total of ₹1.00 in 2020 to the most recent total annual payment of ₹8.00. This means that it has been growing its distributions at 183% 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 see if earnings per share is growing. Share India Securities has impressed us by growing EPS at 75% per year over the past five years. A low payout ratio gives the company a lot of flexibility, and growing earnings also make it very easy for it to grow the dividend.

We Really Like Share India Securities' Dividend

In summary, it is always positive to see the dividend being increased, and we are particularly pleased with its overall sustainability. The company is easily earning enough to cover its dividend payments and it is great to see that these earnings are being translated into cash flow. Taking this all into consideration, this looks like it could be a good dividend opportunity.

Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. For example, we've picked out 1 warning sign for Share India Securities 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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