Bombay Metrics Supply Chain (NSE:BMETRICS) Is Paying Out A Larger Dividend Than Last Year

Bombay Metrics Supply Chain Limited (NSE:BMETRICS) has announced that it will be increasing its dividend from last year's comparable payment on the 20th of October to ₹0.45. Even though the dividend went up, the yield is still quite low at only 0.3%.

View our latest analysis for Bombay Metrics Supply Chain

Bombay Metrics Supply Chain's Earnings Easily Cover The Distributions

Even a low dividend yield can be attractive if it is sustained for years on end. Prior to this announcement, Bombay Metrics Supply Chain's earnings easily covered the dividend, but free cash flows were negative. With the company not bringing in any cash, paying out to shareholders is bound to become difficult at some point.

Over the next year, EPS could expand by 12.1% if recent trends continue. If the dividend continues on this path, the payout ratio could be 9.7% by next year, which we think can be pretty sustainable going forward.

Bombay Metrics Supply Chain Is Still Building Its Track Record

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 2022, the annual payment back then was ₹0.20, compared to the most recent full-year payment of ₹0.45. This works out to be a compound annual growth rate (CAGR) of approximately 50% a year over that time. It is always nice to see strong dividend growth, but with such a short payment history we wouldn't be inclined to rely on it until a longer track record can be developed.

The Dividend Looks Likely To Grow

Some investors will be chomping at the bit to buy some of the company's stock based on its dividend history. Bombay Metrics Supply Chain has impressed us by growing EPS at 12% per year over the past five years. With a decent amount of growth and a low payout ratio, we think this bodes well for Bombay Metrics Supply Chain's prospects of growing its dividend payments in the future.

Our Thoughts On Bombay Metrics Supply Chain's Dividend

In summary, while it's always good to see the dividend being raised, we don't think Bombay Metrics Supply Chain's payments are rock solid. While the low payout ratio is a redeeming feature, this is offset by the minimal cash to cover the payments. We don't think Bombay Metrics Supply Chain is a great stock to add to your portfolio if income is your focus.

Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. Case in point: We've spotted 4 warning signs for Bombay Metrics Supply Chain (of which 1 is potentially serious!) you should know about. If you are a dividend investor, you might also want to look at our curated list of high yield 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.