Carborundum Universal (NSE:CARBORUNIV) Has Announced A Dividend Of ₹2.00

Carborundum Universal Limited's (NSE:CARBORUNIV) investors are due to receive a payment of ₹2.00 per share on 24th of August. This means the annual payment will be 0.4% of the current stock price, which is lower than the industry average.

View our latest analysis for Carborundum Universal

Carborundum Universal's Earnings Easily Cover The Distributions

If it is predictable over a long period, even low dividend yields can be attractive. However, prior to this announcement, Carborundum Universal's dividend was comfortably covered by both cash flow and earnings. 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 78.9%. Assuming the dividend continues along recent trends, we think the payout ratio could be 10.0% by next year, which is in a pretty sustainable range.

Dividend Volatility

The company's dividend history has been marked by instability, with at least one cut in the last 10 years. Since 2013, the annual payment back then was ₹2.00, compared to the most recent full-year payment of ₹4.00. This means that it has been growing its distributions at 7.2% per annum over that time. A reasonable rate of dividend growth is good to see, but we're wary that the dividend history is not as solid as we'd like, having been cut at least once.

The Dividend Looks Likely To Grow

With a relatively unstable dividend, it's even more important to evaluate if earnings per share is growing, which could point to a growing dividend in the future. We are encouraged to see that Carborundum Universal has grown earnings per share at 14% per year over the past five years. With a decent amount of growth and a low payout ratio, we think this bodes well for Carborundum Universal's prospects of growing its dividend payments in the future.

Carborundum Universal Looks Like A Great Dividend Stock

Overall, we like to see the dividend staying consistent, and we think Carborundum Universal might even raise payments in the future. 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.

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. Earnings growth generally bodes well for the future value of company dividend payments. See if the 10 Carborundum Universal analysts we track are forecasting continued growth with our free report on analyst estimates for the company. 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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