Maithan Alloys (NSE:MAITHANALL) Has Affirmed Its Dividend Of ₹6.00

The board of Maithan Alloys Limited (NSE:MAITHANALL) has announced that it will pay a dividend of ₹6.00 per share on the 27th of October. This payment means the dividend yield will be 1.5%, which is below the average for the industry.

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Maithan Alloys' Future Dividend Projections Appear Well Covered By Earnings

It would be nice for the yield to be higher, but we should also check if higher levels of dividend payment would be sustainable. Prior to this announcement, Maithan Alloys' dividend was only 7.4% of earnings, however it was paying out 238% of free cash flows. While the business may be attempting to set a balanced dividend policy, a cash payout ratio this high might expose the dividend to being cut if the business ran into some challenges.

Looking forward, earnings per share could rise by 28.2% over the next year if the trend from the last few years continues. If the dividend continues along recent trends, we estimate the payout ratio will be 6.1%, which is in the range that makes us comfortable with the sustainability of the dividend.

See our latest analysis for Maithan Alloys

Maithan Alloys Has A Solid Track Record

The company has a sustained record of paying dividends with very little fluctuation. Since 2015, the annual payment back then was ₹1.00, compared to the most recent full-year payment of ₹16.00. This implies that the company grew its distributions at a yearly rate of about 32% over that duration. It is good to see that there has been strong dividend growth, and that there haven't been any cuts for a long time.

The Dividend Looks Likely To Grow

Investors who have held shares in the company for the past few years will be happy with the dividend income they have received. Maithan Alloys has seen EPS rising for the last five years, at 28% per annum. A low payout ratio gives the company a lot of flexibility, and growing earnings also make it very easy for it to grow the dividend.

Our Thoughts On Maithan Alloys' 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. While the low payout ratio is a redeeming feature, this is offset by the minimal cash to cover the payments. We would probably look elsewhere for an income investment.

Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. For instance, we've picked out 2 warning signs for Maithan Alloys that investors should take into consideration. Is Maithan Alloys not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

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