Manaksia Aluminium (NSE:MANAKALUCO) Has Announced A Dividend Of ₹0.07

Manaksia Aluminium Company Limited (NSE:MANAKALUCO) will pay a dividend of ₹0.07 on the 16th of October. This payment means the dividend yield will be 0.2%, which is below the average for the industry.

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Manaksia Aluminium's Payment Could Potentially Have Solid Earnings Coverage

The dividend yield is a little bit low, but sustainability of the payments is also an important part of evaluating an income stock. Manaksia Aluminium is quite easily earning enough to cover the dividend, however it is being let down by weak cash flows. In general, we consider cash flow to be more important than earnings, so we would be cautious about relying on the sustainability of this dividend.

Over the next year, EPS could expand by 23.6% if recent trends continue. If the dividend continues on this path, the payout ratio could be 5.4% by next year, which we think can be pretty sustainable going forward.

See our latest analysis for Manaksia Aluminium

Manaksia Aluminium 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 2 years, which isn't that long in the grand scheme of things. Since 2023, the annual payment back then was ₹0.05, compared to the most recent full-year payment of ₹0.07. This works out to be a compound annual growth rate (CAGR) of approximately 18% 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

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 Manaksia Aluminium has grown earnings per share at 24% per year over the past five years. Earnings have been growing rapidly, and with a low payout ratio we think that the company could turn out to be a great dividend stock.

Our Thoughts On Manaksia Aluminium's Dividend

In summary, while it's good to see that the dividend hasn't been cut, we are a bit cautious about Manaksia Aluminium's payments, as there could be some issues with sustaining them into the future. With cash flows lacking, it is difficult to see how the company can sustain a dividend payment. Overall, we don't think this company has the makings of a good income stock.

Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. Case in point: We've spotted 3 warning signs for Manaksia Aluminium (of which 2 are potentially serious!) you should know about. Is Manaksia Aluminium 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.