Shree Pushkar Chemicals & Fertilisers' (NSE:SHREEPUSHK) Dividend Is Being Reduced To ₹1.50

Shree Pushkar Chemicals & Fertilisers Limited's (NSE:SHREEPUSHK) dividend is being reduced from last year's payment covering the same period to ₹1.50 on the 30th of October. The dividend yield will be in the average range for the industry at 0.7%.

Check out our latest analysis for Shree Pushkar Chemicals & Fertilisers

Shree Pushkar Chemicals & Fertilisers' Payment Has Solid Earnings Coverage

Unless the payments are sustainable, the dividend yield doesn't mean too much. However, Shree Pushkar Chemicals & Fertilisers' earnings easily cover the dividend. This means that most of its earnings are being retained to grow the business.

Unless the company can turn things around, EPS could fall by 5.3% over the next year. If the dividend continues along the path it has been on recently, we estimate the payout ratio could be 17%, which is definitely feasible to continue.

Shree Pushkar Chemicals & Fertilisers' Dividend Has Lacked Consistency

Looking back, Shree Pushkar Chemicals & Fertilisers' dividend hasn't been particularly consistent. Due to this, we are a little bit cautious about the dividend consistency over a full economic cycle. Since 2015, the dividend has gone from ₹1.00 total annually to ₹1.50. This means that it has been growing its distributions at 5.2% per annum over that time. A reasonable rate of dividend growth is good to see, but we're wary that the dividend history is not as solid as we'd like, having been cut at least once.

Dividend Growth Is Doubtful

Given that the dividend has been cut in the past, we need to check if earnings are growing and if that might lead to stronger dividends in the future. It's not great to see that Shree Pushkar Chemicals & Fertilisers' earnings per share has fallen at approximately 5.3% per year over the past five years. If the company is making less over time, it naturally follows that it will also have to pay out less in dividends.

In Summary

In summary, dividends being cut isn't ideal, however it can bring the payment into a more sustainable range. The payments haven't been particularly stable and we don't see huge growth potential, but with the dividend well covered by cash flows it could prove to be reliable over the short term. This company is not in the top tier of income providing stocks.

Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. However, there are other things to consider for investors when analysing stock performance. Taking the debate a bit further, we've identified 3 warning signs for Shree Pushkar Chemicals & Fertilisers that investors need to be conscious of moving forward. Is Shree Pushkar Chemicals & Fertilisers not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

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