Triveni Engineering & Industries' (NSE:TRIVENI) Dividend Will Be Reduced To ₹1.25

Triveni Engineering & Industries Limited (NSE:TRIVENI) has announced that on 13th of October, it will be paying a dividend of₹1.25, which a reduction from last year's comparable dividend. Based on this payment, the dividend yield will be 0.6%, which is lower than the average for the industry.

View our latest analysis for Triveni Engineering & Industries

Triveni Engineering & Industries' Payment Has Solid Earnings Coverage

If it is predictable over a long period, even low dividend yields can be attractive. Based on the last payment, Triveni Engineering & Industries was earning enough to cover the dividend, but free cash flows weren't positive. We think that cash flows should take priority over earnings, so this is definitely a worry for the dividend going forward.

Over the next year, EPS is forecast to expand by 25.1%. Assuming the dividend continues along recent trends, we think the payout ratio could be 39% by next year, which is in a pretty sustainable range.

Triveni Engineering & Industries' Dividend Has Lacked Consistency

Triveni Engineering & Industries has been paying dividends for a while, but the track record isn't stellar. If the company cuts once, it definitely isn't argument against the possibility of it cutting in the future. The annual payment during the last 7 years was ₹0.25 in 2017, and the most recent fiscal year payment was ₹2.50. This means that it has been growing its distributions at 39% per annum over that time. It is great to see strong growth in the dividend payments, but cuts are concerning as it may indicate the payout policy is too ambitious.

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. Triveni Engineering & Industries has impressed us by growing EPS at 15% per year over the past five years. With a decent amount of growth and a low payout ratio, we think this bodes well for Triveni Engineering & Industries' prospects of growing its dividend payments in the future.

Our Thoughts On Triveni Engineering & Industries' Dividend

Overall, it's not great to see that the dividend has been cut, but this might be explained by the payments being a bit high previously. While Triveni Engineering & Industries is earning enough to cover the payments, the cash flows are lacking. We would be a touch cautious of relying on this stock primarily for the dividend income.

Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. However, there are other things to consider for investors when analysing stock performance. For example, we've identified 3 warning signs for Triveni Engineering & Industries (1 is a bit concerning!) that you should be aware of before investing. Is Triveni Engineering & 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.