Maithan Alloys (NSE:MAITHANALL) Is Due To Pay A 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 26th of October. This means the annual payment will be 0.6% of the current stock price, which is lower than the industry average.

See our latest analysis for Maithan Alloys

Maithan Alloys' Payment Has Solid Earnings Coverage

It would be nice for the yield to be higher, but we should also check if higher levels of dividend payment would be sustainable. However, prior to this announcement, Maithan Alloys' dividend was comfortably covered by both cash flow and earnings. This means that most of what the business earns is being used to help it grow.

Over the next year, EPS could expand by 3.1% if recent trends continue. If the dividend continues on this path, the payout ratio could be 5.7% by next year, which we think can be pretty sustainable going forward.

Maithan Alloys 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 2013, the dividend has gone from ₹1.00 total annually to ₹6.00. This implies that the company grew its distributions at a yearly rate of about 20% over that duration. Rapidly growing dividends for a long time is a very valuable feature for an income stock.

Maithan Alloys May Find It Hard To Grow The Dividend

Investors who have held shares in the company for the past few years will be happy with the dividend income they have received. Earnings has been rising at 3.1% per annum over the last five years, which admittedly is a bit slow. While growth may be thin on the ground, Maithan Alloys could always pay out a higher proportion of earnings to increase shareholder returns.

Maithan Alloys Looks Like A Great Dividend Stock

Overall, we like to see the dividend staying consistent, and we think Maithan Alloys might even raise payments in the future. Earnings are easily covering distributions, and the company is generating plenty of cash. All of these factors considered, we think this has solid potential as a dividend stock.

Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. Taking the debate a bit further, we've identified 1 warning sign for Maithan Alloys that investors need to be conscious of moving forward. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.

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