Mangalam Cement (NSE:MANGLMCEM) Is Increasing Its Dividend To ₹1.50

By
Simply Wall St
Published
August 27, 2021
NSEI:MANGLMCEM
Source: Shutterstock

Mangalam Cement Limited's (NSE:MANGLMCEM) dividend will be increasing to ₹1.50 on 18th of October. Even though the dividend went up, the yield is still quite low at only 0.3%.

While the dividend yield is important for income investors, it is also important to consider any large share price moves, as this will generally outweigh any gains from distributions. Investors will be pleased to see that Mangalam Cement's stock price has increased by 46% in the last 3 months, which is good for shareholders and can also explain a decrease in the dividend yield.

Check out our latest analysis for Mangalam Cement

Mangalam Cement's Payment Has Solid Earnings Coverage

Even a low dividend yield can be attractive if it is sustained for years on end. However, prior to this announcement, Mangalam Cement's dividend was comfortably covered by both cash flow and earnings. This means that most of its earnings are being retained to grow the business.

Over the next year, EPS could expand by 86.2% if recent trends continue. Assuming the dividend continues along recent trends, we think the payout ratio could be 1.5% by next year, which is in a pretty sustainable range.

historic-dividend
NSEI:MANGLMCEM Historic Dividend August 28th 2021

Dividend Volatility

The company has a long dividend track record, but it doesn't look great with cuts in the past. The dividend has gone from ₹6.00 in 2011 to the most recent annual payment of ₹1.50. Dividend payments have fallen sharply, down 75% over that time. Generally, we don't like to see a dividend that has been declining over time as this can degrade shareholders' returns and indicate that the company may be running into problems.

The Dividend Looks Likely To Grow

Given that dividend payments have been shrinking like a glacier in a warming world, we need to check if there are some bright spots on the horizon. Mangalam Cement has seen EPS rising for the last three years, at 86% per annum. 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.

Mangalam Cement Looks Like A Great Dividend Stock

Overall, we think this could be an attractive income stock, and it is only getting better by paying a higher dividend this year. The company is easily earning enough to cover its dividend payments and it is great to see that these earnings are being translated into cash flow. Taking this all into consideration, this looks like it could be a good dividend opportunity.

It's important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. For instance, we've picked out 2 warning signs for Mangalam Cement that investors should take into consideration. Looking for more high-yielding dividend ideas? Try our curated list of strong dividend payers.

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