HeidelbergCement India's (NSE:HEIDELBERG) Upcoming Dividend Will Be Larger Than Last Year's

HeidelbergCement India Limited (NSE:HEIDELBERG) has announced that it will be increasing its dividend on the 27th of October to ₹8.00. This makes the dividend yield 3.0%, which is above the industry average.

View our latest analysis for HeidelbergCement India

HeidelbergCement India's Earnings Easily Cover the Distributions

Impressive dividend yields are good, but this doesn't matter much if the payments can't be sustained. The last dividend was quite easily covered by HeidelbergCement India's earnings. This means that a large portion of its earnings are being retained to grow the business.

Looking forward, earnings per share could rise by 40.2% over the next year if the trend from the last few years continues. If the dividend continues on this path, the payout ratio could be 50% by next year, which we think can be pretty sustainable going forward.

HeidelbergCement India Is Still Building Its Track Record

The dividend hasn't seen any major cuts in the past, but the company has only been paying a dividend for 4 years, which isn't that long in the grand scheme of things. Since 2017, the dividend has gone from ₹2.00 to ₹8.00. This works out to be a compound annual growth rate (CAGR) of approximately 41% a year over that time. We're not overly excited about the relatively short history of dividend payments, however the dividend is growing at a nice rate and we might take a closer look.

The Dividend Looks Likely To Grow

The company's investors will be pleased to have been receiving dividend income for some time. HeidelbergCement India has seen EPS rising for the last five years, at 40% per annum. The company doesn't have any problems growing, despite returning a lot of capital to shareholders, which is a very nice combination for a dividend stock to have.

We Really Like HeidelbergCement India's Dividend

In summary, it is always positive to see the dividend being increased, and we are particularly pleased with its overall sustainability. Earnings are easily covering distributions, and the company is generating plenty of cash. Taking this all into consideration, this looks like it could be a good dividend opportunity.

Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. Taking the debate a bit further, we've identified 1 warning sign for HeidelbergCement India that investors need to be conscious of moving forward. If you are a dividend investor, you might also want to look at our curated list of high performing dividend stock.

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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.
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