Dalmia Bharat Sugar and Industries (NSE:DALMIASUG) Has Affirmed Its Dividend Of ₹1.00

The board of Dalmia Bharat Sugar and Industries Limited (NSE:DALMIASUG) has announced that it will pay a dividend on the 16th of August, with investors receiving ₹1.00 per share. This means that the annual payment will be 1.1% of the current stock price, which is in line with the average for the industry.

See our latest analysis for Dalmia Bharat Sugar and Industries

Dalmia Bharat Sugar and Industries' Earnings Easily Cover The Distributions

Solid dividend yields are great, but they only really help us if the payment is sustainable. However, Dalmia Bharat Sugar and Industries' earnings easily cover the dividend. As a result, a large proportion of what it earned was being reinvested back into the business.

Looking forward, earnings per share is forecast to rise by 82.5% over the next year. If the dividend continues on this path, the payout ratio could be 8.4% by next year, which we think can be pretty sustainable going forward.

Dividend Volatility

The company has a long dividend track record, but it doesn't look great with cuts in the past. The dividend has gone from an annual total of ₹0.25 in 2013 to the most recent total annual payment of ₹4.00. This works out to be a compound annual growth rate (CAGR) of approximately 32% a year over that time. Dalmia Bharat Sugar and Industries has grown distributions at a rapid rate despite cutting the dividend at least once in the past. Companies that cut once often cut again, so we would be cautious about buying this stock solely for the dividend income.

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. It's encouraging to see that Dalmia Bharat Sugar and Industries has been growing its earnings per share at 15% a year over the past five years. With a decent amount of growth and a low payout ratio, we think this bodes well for Dalmia Bharat Sugar and Industries' prospects of growing its dividend payments in the future.

We Really Like Dalmia Bharat Sugar and Industries' Dividend

In summary, it is good to see that the dividend is staying consistent, and we don't think there is any reason to suspect this might change over the medium term. Distributions are quite easily covered by earnings, which are also being converted to cash flows. 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. However, there are other things to consider for investors when analysing stock performance. For example, we've picked out 1 warning sign for Dalmia Bharat Sugar and Industries 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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