SMC Global Securities (NSE:SMCGLOBAL) Is Paying Out A Dividend Of ₹1.20

SMC Global Securities Limited (NSE:SMCGLOBAL) has announced that it will pay a dividend of ₹1.20 per share on the 30th of July. This makes the dividend yield 3.2%, which will augment investor returns quite nicely.

See our latest analysis for SMC Global Securities

SMC Global Securities' Earnings Easily Cover The Distributions

If the payments aren't sustainable, a high yield for a few years won't matter that much. SMC Global Securities is quite easily earning enough to cover the dividend, however it is being let down by weak cash flows. With the company not bringing in any cash, paying out to shareholders is bound to become difficult at some point.

If the trend of the last few years continues, EPS will grow by 19.7% over the next 12 months. If the dividend continues along recent trends, we estimate the payout ratio will be 20%, which is in the range that makes us comfortable with the sustainability of the dividend.

SMC Global Securities Doesn't Have A Long Payment History

The dividend hasn't seen any major cuts in the past, but the company has only been paying a dividend for 2 years, which isn't that long in the grand scheme of things. Since 2021, the dividend has gone from ₹0.80 total annually to ₹2.40. This means that it has been growing its distributions at 73% per annum over that time. We're not overly excited about the relatively short history of dividend payments, however the dividend is growing at a nice rate and we might take a closer look.

The Dividend Looks Likely To Grow

Investors could be attracted to the stock based on the quality of its payment history. It's encouraging to see that SMC Global Securities has been growing its earnings per share at 20% a year over the past five years. Growth in EPS bodes well for the dividend, as does the low payout ratio that the company is currently reporting.

Our Thoughts On SMC Global Securities' 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 SMC Global Securities is earning enough to cover the payments, the cash flows are lacking. We don't think SMC Global Securities is a great stock to add to your portfolio if income is your focus.

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. To that end, SMC Global Securities has 4 warning signs (and 1 which doesn't sit too well with us) we think you should know about. Is SMC Global Securities not quite the opportunity you were looking for? Why not check out our selection of top 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.