Nakoda Group of Industries (NSE:NGIL) Has Affirmed Its Dividend Of ₹0.15

Nakoda Group of Industries Limited's (NSE:NGIL) investors are due to receive a payment of ₹0.15 per share on 22nd of October. The dividend yield is 0.3% based on this payment, which is a little bit low compared to the other companies in the industry.

See our latest analysis for Nakoda Group of Industries

Nakoda Group of Industries' Payment Has Solid Earnings Coverage

While yield is important, another factor to consider about a company's dividend is whether the current payout levels are feasible. Before making this announcement, Nakoda Group of 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.

Unless the company can turn things around, EPS could fall by 9.0% over the next year. Assuming the dividend continues along recent trends, we believe the payout ratio could be 22%, which we are pretty comfortable with and we think is feasible on an earnings basis.

Nakoda Group of Industries Doesn't Have A Long Payment History

The company has maintained a consistent dividend for a few years now, but we would like to see a longer track record before relying on it. Since 2021, the dividend has gone from ₹0.10 total annually to ₹0.15. This works out to be a compound annual growth rate (CAGR) of approximately 22% a year over that time. Nakoda Group of Industries has been growing its dividend quite rapidly, which is exciting. However, the short payment history makes us question whether this performance will persist across a full market cycle.

Dividend Growth May Be Hard To Come By

The company's investors will be pleased to have been receiving dividend income for some time. However, things aren't all that rosy. It's not great to see that Nakoda Group of Industries' earnings per share has fallen at approximately 9.0% per year over the past five years. If the company is making less over time, it naturally follows that it will also have to pay out less in dividends.

Our Thoughts On Nakoda Group of Industries' 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. The company is generating plenty of cash, which could maintain the dividend for a while, but the track record hasn't been great. Overall, we don't think this company has the makings of a good income stock.

It's important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. However, there are other things to consider for investors when analysing stock performance. For example, we've identified 5 warning signs for Nakoda Group of Industries (2 are a bit unpleasant!) that you should be aware of before investing. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.

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