Mayur Uniquoters (NSE:MAYURUNIQ) Is Increasing Its Dividend To ₹2.00

Mayur Uniquoters Limited (NSE:MAYURUNIQ) will increase its dividend on the 26th of September to ₹2.00. Even though the dividend went up, the yield is still quite low at only 0.4%.

Check out our latest analysis for Mayur Uniquoters

Mayur Uniquoters' Payment Has Solid Earnings Coverage

Even a low dividend yield can be attractive if it is sustained for years on end. However, Mayur Uniquoters' earnings easily cover the dividend. This means that most of what the business earns is being used to help it grow.

The next year is set to see EPS grow by 9.5%. Assuming the dividend continues along recent trends, we think the payout ratio could be 8.9% by next year, which is in a pretty sustainable range.

Dividend Volatility

Although the company has a long dividend history, it has been cut at least once in the last 10 years. The dividend has gone from ₹0.75 in 2011 to the most recent annual payment of ₹2.00. This implies that the company grew its distributions at a yearly rate of about 10% over that duration. Mayur Uniquoters has grown distributions at a rapid rate despite cutting the dividend at least once in the past. Companies that cut once often cut again, so we would be cautious about buying this stock solely for the dividend income.

Dividend Growth May Be Hard To Achieve

With a relatively unstable dividend, it's even more important to evaluate if earnings per share is growing, which could point to a growing dividend in the future. However, Mayur Uniquoters has only grown its earnings per share at 4.4% per annum over the past five years. If Mayur Uniquoters is struggling to find viable investments, it always has the option to increase its payout ratio to pay more to shareholders.

In Summary

Overall, this is a reasonable dividend, and it being raised is an added bonus. The payout ratio looks good, but unfortunately the company's dividend track record isn't stellar. This looks like it could be a good dividend stock going forward, but we would note that the payout ratio has been at higher levels in the past so it could happen again.

It's important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. For example, we've picked out 1 warning sign for Mayur Uniquoters that investors should know about before committing capital to this stock. Looking for more high-yielding dividend ideas? Try our curated list of strong dividend payers.

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