Shree Pushkar Chemicals & Fertilisers (NSE:SHREEPUSHK) Is Due To Pay A Dividend Of ₹1.50

Shree Pushkar Chemicals & Fertilisers Limited's (NSE:SHREEPUSHK) investors are due to receive a payment of ₹1.50 per share on 28th of October. Including this payment, the dividend yield on the stock will be 0.6%, which is a modest boost for shareholders' returns.

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 Shree Pushkar Chemicals & Fertilisers' stock price has increased by 42% in the last 3 months, which is good for shareholders and can also explain a decrease in the dividend yield.

See our latest analysis for Shree Pushkar Chemicals & Fertilisers

Shree Pushkar Chemicals & Fertilisers' Dividend Is Well Covered By Earnings

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, Shree Pushkar Chemicals & Fertilisers' 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.

Over the next year, EPS could expand by 0.9% if recent trends continue. Assuming the dividend continues along recent trends, we think the payout ratio could be 12% by next year, which is in a pretty sustainable range.

Shree Pushkar Chemicals & Fertilisers' Dividend Has Lacked Consistency

Shree Pushkar Chemicals & Fertilisers has been paying dividends for a while, but the track record isn't stellar. This suggests that the dividend might not be the most reliable. The dividend has gone from an annual total of ₹1.00 in 2015 to the most recent total annual payment of ₹1.50. This implies that the company grew its distributions at a yearly rate of about 4.6% over that duration. We're glad to see the dividend has risen, but with a limited rate of growth and fluctuations in the payments the total shareholder return may be limited.

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. Although it's important to note that Shree Pushkar Chemicals & Fertilisers' earnings per share has basically not grown from where it was five years ago, which could erode the purchasing power of the dividend over time. Earnings growth is slow, but on the plus side, the dividend payout ratio is low and dividends could grow faster than earnings, if the company decides to increase its payout ratio.

In Summary

In summary, while it's good to see that the dividend hasn't been cut, we are a bit cautious about Shree Pushkar Chemicals & Fertilisers' payments, as there could be some issues with sustaining them into the future. While Shree Pushkar Chemicals & Fertilisers is earning enough to cover the payments, the cash flows are lacking. We would be a touch cautious of relying on this stock primarily for the dividend income.

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. As an example, we've identified 4 warning signs for Shree Pushkar Chemicals & Fertilisers that you should be aware of before investing. 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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