Dalmia Bharat Sugar and Industries (NSE:DALMIASUG) Is Due To Pay A Dividend Of ₹1.50

The board of Dalmia Bharat Sugar and Industries Limited (NSE:DALMIASUG) has announced that it will pay a dividend on the 11th of July, with investors receiving ₹1.50 per share. This makes the dividend yield 1.4%, which is above the industry average.

While the dividend yield is important for income investors, it is also important to consider any large share price moves, as this will generally outweigh any gains from distributions. Investors will be pleased to see that Dalmia Bharat Sugar and Industries' stock price has increased by 34% in the last 3 months, which is good for shareholders and can also explain a decrease in the dividend yield.

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Dalmia Bharat Sugar and Industries' Future Dividend Projections Appear Well Covered By Earnings

A big dividend yield for a few years doesn't mean much if it can't be sustained. Before making this announcement, Dalmia Bharat Sugar and Industries was easily earning enough to cover the dividend. This means that most of what the business earns is being used to help it grow.

Over the next year, EPS is forecast to expand by 2.3%. If the dividend continues on this path, the payout ratio could be 15% by next year, which we think can be pretty sustainable going forward.

See our latest analysis for Dalmia Bharat Sugar and Industries

Dalmia Bharat Sugar and Industries' Dividend Has Lacked Consistency

It's comforting to see that Dalmia Bharat Sugar and Industries has been paying a dividend for a number of years now, however it has been cut at least once in that time. This makes us cautious about the consistency of the dividend over a full economic cycle. Since 2016, the annual payment back then was ₹0.60, compared to the most recent full-year payment of ₹6.00. This means that it has been growing its distributions at 29% per annum 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

Given that the dividend has been cut in the past, we need to check if earnings are growing and if that might lead to stronger dividends in the future. We are encouraged to see that Dalmia Bharat Sugar and Industries has grown earnings per share at 15% per year over the past five years. Dalmia Bharat Sugar and Industries definitely has the potential to grow its dividend in the future with earnings on an uptrend and a low payout ratio.

Dalmia Bharat Sugar and Industries Looks Like A Great Dividend Stock

Overall, we think this could be an attractive income stock, and it is only getting better by paying a higher dividend this year. Earnings are easily covering distributions, and the company is generating plenty of cash. All in all, this checks a lot of the boxes we look for when choosing an income stock.

Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. As an example, we've identified 1 warning sign for Dalmia Bharat Sugar and Industries that you should be aware of before investing. Is Dalmia Bharat Sugar and Industries 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.