Mayur Uniquoters (NSE:MAYURUNIQ) Has Affirmed Its Dividend Of ₹2.00

Mayur Uniquoters Limited (NSE:MAYURUNIQ) has announced that it will pay a dividend of ₹2.00 per share on the 28th of August. The dividend yield is 0.6% based on this payment, which is a little bit low compared to the other companies in the industry.

See our latest analysis for Mayur Uniquoters

Mayur Uniquoters' Earnings Easily Cover the Distributions

The dividend yield is a little bit low, but sustainability of the payments is also an important part of evaluating an income stock. Prior to this announcement, Mayur Uniquoters' earnings easily covered the dividend, but free cash flows were negative. With the company not bringing in any cash, paying out to shareholders is bound to become difficult at some point.

Looking forward, earnings per share is forecast to rise by 54.5% over the next year. If the dividend continues on this path, the payout ratio could be 5.8% by next year, which we think can be pretty sustainable going forward.

Dividend Volatility

While the company has been paying a dividend for a long time, it has cut the dividend at least once in the last 10 years. Since 2012, the first annual payment was ₹1.69, compared to the most recent full-year payment of ₹2.00. This means that it has been growing its distributions at 1.7% per annum over that time. The dividend has seen some fluctuations in the past, so even though the dividend was raised this year, we should remember that it has been cut in the past.

Dividend Growth May Be Hard To Achieve

With a relatively unstable dividend, it's even more important to see if earnings per share is growing. Earnings have grown at around 3.9% a year for the past five years, which isn't massive but still better than seeing them shrink. While EPS growth is quite low, Mayur Uniquoters has the option to increase the payout ratio to return more cash to shareholders.

In Summary

In summary, while it's good to see that the dividend hasn't been cut, we are a bit cautious about Mayur Uniquoters' 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. We would be a touch cautious of relying on this stock primarily for the dividend income.

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. To that end, Mayur Uniquoters has 2 warning signs (and 1 which is concerning) we think you should know about. If you are a dividend investor, you might also want to look at our curated list of high yield dividend stocks.

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