Kakatiya Cement Sugar and Industries (NSE:KAKATCEM) Is Due To Pay A Dividend Of ₹3.00

The board of Kakatiya Cement Sugar and Industries Limited (NSE:KAKATCEM) has announced that it will pay a dividend of ₹3.00 per share on the 27th of September. This makes the dividend yield 1.9%, which will augment investor returns quite nicely.

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Kakatiya Cement Sugar and Industries' Distributions May Be Difficult To Sustain

We like to see robust dividend yields, but that doesn't matter if the payment isn't sustainable. While Kakatiya Cement Sugar and Industries is not profitable, it is paying out less than 75% of its free cash flow, which means that there is plenty left over for reinvestment into the business. This gives us some comfort about the level of the dividend payments.

Looking forward, earnings per share could fall by 32.2% over the next year if the trend of the last few years can't be broken. This means that the company won't turn a profit over the next year, but with healthy cash flows at the moment the dividend could still be okay to continue.

View our latest analysis for Kakatiya Cement Sugar and Industries

Kakatiya Cement Sugar and Industries Has A Solid Track Record

The company has been paying a dividend for a long time, and it has been quite stable which gives us confidence in the future dividend potential. Since 2015, the dividend has gone from ₹2.70 total annually to ₹3.00. This means that it has been growing its distributions at 1.1% per annum over that time. Although we can't deny that the dividend has been remarkably stable in the past, the growth has been pretty muted.

The Dividend Has Limited Growth Potential

The company's investors will be pleased to have been receiving dividend income for some time. Let's not jump to conclusions as things might not be as good as they appear on the surface. Earnings per share has been sinking by 32% over the last five years. Such rapid declines definitely have the potential to constrain dividend payments if the trend continues into the future.

Our Thoughts On Kakatiya Cement Sugar and Industries' Dividend

Overall, it's nice to see a consistent dividend payment, but we think that longer term, the current level of payment might be unsustainable. The company is generating plenty of cash, but we still think the dividend is a bit high for comfort. We don't think Kakatiya Cement Sugar and Industries is a great stock to add to your portfolio if income is your focus.

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 identified 3 warning signs for Kakatiya Cement Sugar and Industries (1 shouldn't be ignored!) that you should be aware of before investing. Is Kakatiya Cement Sugar and Industries not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

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