Steel City Securities (NSE:STEELCITY) Has Re-Affirmed Its Dividend Of ₹1.00

Steel City Securities Limited's (NSE:STEELCITY) investors are due to receive a payment of ₹1.00 per share on 12th of March. This means the annual payment is 4.6% of the current stock price, which is above the average for the industry.

Check out our latest analysis for Steel City Securities

Steel City Securities' Payment Has Solid Earnings Coverage

A big dividend yield for a few years doesn't mean much if it can't be sustained. Before making this announcement, Steel City 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 18.1% over the next 12 months. If the dividend continues along recent trends, we estimate the payout ratio will be 28%, which is in the range that makes us comfortable with the sustainability of the dividend.

Steel City Securities' Dividend Has Lacked Consistency

Even in its short history, we have seen the dividend cut. The first annual payment during the last 4 years was ₹2.50 in 2018, and the most recent fiscal year payment was ₹3.00. This means that it has been growing its distributions at 4.7% per annum over that time. Modest growth in the dividend is good to see, but we think this is offset by historical cuts to the payments. It is hard to live on a dividend income if the company's earnings are not consistent.

The Dividend Looks Likely To Grow

With a relatively unstable dividend, it's even more important to evaluate if earnings per share is growing, which could point to a growing dividend in the future. We are encouraged to see that Steel City Securities has grown earnings per share at 18% per year over the past five years. A low payout ratio and decent growth suggests that the company is reinvesting well, and it also has plenty of room to increase the dividend over time.

Steel City Securities Looks Like A Great Dividend Stock

Overall, we like to see the dividend staying consistent, and we think Steel City Securities might even raise payments in the future. 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. All of these factors considered, we think this has solid potential as a dividend stock.

It's important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic 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 2 warning signs for Steel City Securities that investors should know about before committing capital to this stock. If you are a dividend investor, you might also want to look at our curated list of high performing dividend stock.

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