Triveni Engineering & Industries (NSE:TRIVENI) Is Reducing Its Dividend 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. This means that the annual payment is 0.6% of the current stock price, which is lower than what the rest of the industry is paying.

Check out our latest analysis for Triveni Engineering & Industries

Triveni Engineering & Industries' Payment Has Solid Earnings Coverage

It would be nice for the yield to be higher, but we should also check if higher levels of dividend payment would be sustainable. Prior to this announcement, Triveni Engineering & Industries' earnings easily covered the dividend, but free cash flows were negative. In general, we consider cash flow to be more important than earnings, so we would be cautious about relying on the sustainability of this dividend.

Over the next year, EPS is forecast to expand by 79.8%. If the dividend continues on this path, the payout ratio could be 25% by next year, which we think can be pretty sustainable going forward.

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. Since 2017, the dividend has gone from ₹0.25 total annually to ₹2.50. This means that it has been growing its distributions at 39% per annum over that time. Dividends have grown rapidly over this time, but with cuts in the past we are not certain that this stock will be a reliable source of income in the future.

The Dividend Looks Likely To Grow

Growing earnings per share could be a mitigating factor when considering the past fluctuations in the dividend. We are encouraged to see that Triveni Engineering & Industries has grown earnings per share at 17% 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

In summary, dividends being cut isn't ideal, however it can bring the payment into a more sustainable range. With cash flows lacking, it is difficult to see how the company can sustain a dividend payment. Overall, we don't think this company has the makings of a good income stock.

Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. To that end, Triveni Engineering & Industries has 3 warning signs (and 1 which shouldn't be ignored) we think you should know about. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.

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