Carborundum Universal (NSE:CARBORUNIV) Has Affirmed Its Dividend Of ₹2.00

Carborundum Universal Limited (NSE:CARBORUNIV) will pay a dividend of ₹2.00 on the 24th of August. This payment means the dividend yield will be 0.3%, which is below the average for the industry.

Check out our latest analysis for Carborundum Universal

Carborundum Universal's Dividend Is Well Covered By Earnings

While yield is important, another factor to consider about a company's dividend is whether the current payout levels are feasible. However, Carborundum Universal's earnings easily 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 89.5%. If the dividend continues on this path, the payout ratio could be 9.3% by next year, which we think can be pretty sustainable going forward.

Dividend Volatility

While the company has been paying a dividend for a long time, it has cut the dividend at least once in the last 10 years. The annual payment during the last 10 years was ₹2.00 in 2013, and the most recent fiscal year payment was ₹3.50. This works out to be a compound annual growth rate (CAGR) of approximately 5.8% a year over that time. It's good to see the dividend growing at a decent rate, but the dividend has been cut at least once in the past. Carborundum Universal might have put its house in order since then, but we remain cautious.

The Dividend Looks Likely To Grow

With a relatively unstable dividend, it's even more important to see if earnings per share is growing. It's encouraging to see that Carborundum Universal has been growing its earnings per share at 14% a year over the past five years. A low payout ratio and decent growth suggests that the company is reinvesting well, and it also has plenty of room to increase the dividend over time.

Carborundum Universal Looks Like A Great Dividend Stock

In summary, it is good to see that the dividend is staying consistent, and we don't think there is any reason to suspect this might change over the medium term. Distributions are quite easily covered by earnings, which are also being converted to cash flows. All in all, this checks a lot of the boxes we look for when choosing an income stock.

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. Companies that are growing earnings tend to be the best dividend stocks over the long term. See what the 10 analysts we track are forecasting for Carborundum Universal for free with public analyst estimates for the company. Is Carborundum Universal not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

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