Jindal Saw's (NSE:JINDALSAW) Shareholders Will Receive A Bigger Dividend Than Last Year

Jindal Saw Limited's (NSE:JINDALSAW) periodic dividend will be increasing on the 18th of July to ₹4.00, with investors receiving 33% more than last year's ₹3.00. Although the dividend is now higher, the yield is only 0.6%, which is below the industry average.

Check out our latest analysis for Jindal Saw

Jindal Saw's Payment Has Solid Earnings Coverage

If it is predictable over a long period, even low dividend yields can be attractive. Before making this announcement, Jindal Saw was easily earning enough to cover the dividend. As a result, a large proportion of what it earned was being reinvested back into the business.

Looking forward, earnings per share is forecast to rise by 23.1% over the next year. If the dividend continues on this path, the payout ratio could be 8.2% by next year, which we think can be pretty sustainable going forward.

Jindal Saw Has A Solid Track Record

The company has an extended history of paying stable dividends. Since 2014, the annual payment back then was ₹1.00, compared to the most recent full-year payment of ₹3.00. This implies that the company grew its distributions at a yearly rate of about 12% over that duration. So, dividends have been growing pretty quickly, and even more impressively, they haven't experienced any notable falls during this period.

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. We are encouraged to see that Jindal Saw has grown earnings per share at 14% per year over the past five years. Jindal Saw definitely has the potential to grow its dividend in the future with earnings on an uptrend and a low payout ratio.

We Really Like Jindal Saw's Dividend

Overall, we think this could be an attractive income stock, and it is only getting better by paying a higher dividend this year. 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. However, there are other things to consider for investors when analysing stock performance. For example, we've picked out 2 warning signs for Jindal Saw that investors should know about before committing capital to this stock. Is Jindal Saw not quite the opportunity you were looking for? Why not check out our selection of top 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.