Rajratan Global Wire (NSE:RAJRATAN) Has Announced A Dividend Of ₹2.00

Rajratan Global Wire Limited (NSE:RAJRATAN) has announced that it will pay a dividend of ₹2.00 per share on the 29th of August. This payment means the dividend yield will be 0.3%, which is below the average for the industry.

See our latest analysis for Rajratan Global Wire

Rajratan Global Wire's 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. Prior to this announcement, Rajratan Global Wire's earnings easily covered the dividend, but free cash flows were negative. 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.

Looking forward, earnings per share is forecast to rise by 137.9% over the next year. Assuming the dividend continues along recent trends, we think the payout ratio could be 7.9% by next year, which is in a pretty sustainable range.

Rajratan Global Wire Has A Solid Track Record

Even over a long history of paying dividends, the company's distributions have been remarkably stable. Since 2014, the annual payment back then was ₹0.0857, compared to the most recent full-year payment of ₹2.00. This implies that the company grew its distributions at a yearly rate of about 37% over that duration. Rapidly growing dividends for a long time is a very valuable feature for an income stock.

The Dividend Looks Likely To Grow

The company's investors will be pleased to have been receiving dividend income for some time. We are encouraged to see that Rajratan Global Wire has grown earnings per share at 22% 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 Rajratan Global Wire's Dividend

In summary, while it's good to see that the dividend hasn't been cut, we are a bit cautious about Rajratan Global Wire'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. This company is not in the top tier of income providing stocks.

Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. For instance, we've picked out 1 warning sign for Rajratan Global Wire that investors should take into consideration. 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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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.

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