Shree Pushkar Chemicals & Fertilisers (NSE:SHREEPUSHK) Is Paying Out Less In Dividends Than Last Year

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. However, the dividend yield of 0.7% still remains in a typical range for the industry.

See our latest analysis for Shree Pushkar Chemicals & Fertilisers

Shree Pushkar Chemicals & Fertilisers' Payment Has Solid Earnings Coverage

While it is always good to see a solid dividend yield, we should also consider whether the payment is feasible. Before making this announcement, Shree Pushkar Chemicals & Fertilisers was easily earning enough to cover the dividend. This means that most of its earnings are being retained to grow the business.

Looking forward, EPS could fall by 5.3% if the company can't turn things around from the last few years. 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

Even in its relatively short history, the company has reduced the dividend at least once. This makes us cautious about the consistency of the dividend over a full economic cycle. The annual payment during the last 8 years was ₹1.00 in 2015, and the most recent fiscal year payment was ₹1.50. This means that it has been growing its distributions at 5.2% per annum over that time. We have seen cuts in the past, so while the growth looks promising we would be a little bit cautious about its track record.

Dividend Growth May Be Hard To Come By

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. Shree Pushkar Chemicals & Fertilisers has seen earnings per share falling at 5.3% per year over the last five years. A modest decline in earnings isn't great, and it makes it quite unlikely that the dividend will grow in the future unless that trend can be reversed.

Our Thoughts On Shree Pushkar Chemicals & Fertilisers' Dividend

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.

It's important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. For instance, we've picked out 3 warning signs for Shree Pushkar Chemicals & Fertilisers that investors should take into consideration. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.

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