Gandhi Special Tubes (NSE:GANDHITUBE) Will Pay A Larger Dividend Than Last Year At ₹15.00

The board of Gandhi Special Tubes Limited (NSE:GANDHITUBE) has announced that it will be increasing its dividend by 15% on the 10th of September to ₹15.00, up from last year's comparable payment of ₹13.00. This takes the annual payment to 1.9% of the current stock price, which unfortunately is below what the industry is paying.

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Gandhi Special Tubes' Payment Could Potentially Have Solid Earnings Coverage

The dividend yield is a little bit low, but sustainability of the payments is also an important part of evaluating an income stock. However, Gandhi Special Tubes' earnings easily cover the dividend. As a result, a large proportion of what it earned was being reinvested back into the business.

Over the next year, EPS could expand by 24.8% if recent trends continue. If the dividend continues along recent trends, we estimate the payout ratio will be 29%, which is in the range that makes us comfortable with the sustainability of the dividend.

See our latest analysis for Gandhi Special Tubes

Gandhi Special Tubes Has A Solid Track Record

The company has an extended history of paying stable dividends. The annual payment during the last 10 years was ₹7.50 in 2015, and the most recent fiscal year payment was ₹13.00. This means that it has been growing its distributions at 5.7% per annum over that time. Companies like this can be very valuable over the long term, if the decent rate of growth can be maintained.

The Dividend Looks Likely To Grow

The company's investors will be pleased to have been receiving dividend income for some time. Gandhi Special Tubes has impressed us by growing EPS at 25% per year over the past five years. Earnings have been growing rapidly, and with a low payout ratio we think that the company could turn out to be a great dividend stock.

Gandhi Special Tubes Looks Like A Great Dividend Stock

In summary, it is always positive to see the dividend being increased, and we are particularly pleased with its overall sustainability. The company is easily earning enough to cover its dividend payments and it is great to see that these earnings are being translated into cash flow. All of these factors considered, we think this has solid potential as a dividend stock.

It's important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. As an example, we've identified 1 warning sign for Gandhi Special Tubes that you should be aware of before investing. 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.