Sree Rayalaseema Hi-Strength Hypo's (NSE:SRHHYPOLTD) Dividend Will Be ₹3.00

The board of Sree Rayalaseema Hi-Strength Hypo Limited (NSE:SRHHYPOLTD) has announced that it will pay a dividend on the 24th of October, with investors receiving ₹3.00 per share. This means the annual payment will be 0.5% of the current stock price, which is lower than the industry average.

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Sree Rayalaseema Hi-Strength Hypo's Payment Could Potentially Have 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. Before making this announcement, Sree Rayalaseema Hi-Strength Hypo was easily earning enough to cover the dividend. This means that most of its earnings are being retained to grow the business.

Over the next year, EPS could expand by 15.9% if recent trends continue. Assuming the dividend continues along recent trends, we think the payout ratio could be 5.4% by next year, which is in a pretty sustainable range.

See our latest analysis for Sree Rayalaseema Hi-Strength Hypo

Dividend Volatility

The company has a long dividend track record, but it doesn't look great with cuts in the past. Since 2015, the annual payment back then was ₹1.50, compared to the most recent full-year payment of ₹3.00. This means that it has been growing its distributions at 7.2% 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.

The Dividend Looks Likely To Grow

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. Sree Rayalaseema Hi-Strength Hypo has impressed us by growing EPS at 16% per year over the past five years. With a decent amount of growth and a low payout ratio, we think this bodes well for Sree Rayalaseema Hi-Strength Hypo's prospects of growing its dividend payments in the future.

We Really Like Sree Rayalaseema Hi-Strength Hypo's Dividend

In summary, it is good to see that the dividend is staying consistent, and we don't think there is any reason to suspect this might change over the medium term. Earnings are easily covering distributions, and the company is generating plenty of cash. All of these factors considered, we think this has solid potential as a dividend stock.

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. For example, we've picked out 2 warning signs for Sree Rayalaseema Hi-Strength Hypo that investors should know about before committing capital to this stock. Is Sree Rayalaseema Hi-Strength Hypo not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

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