Tide Water Oil (India) (NSE:TIDEWATER) Will Pay A Dividend Of ₹15.00

Tide Water Oil Co. (India) Limited (NSE:TIDEWATER) will pay a dividend of ₹15.00 on the 22nd of September. This means the annual payment is 4.3% of the current stock price, which is above the average for the industry.

View our latest analysis for Tide Water Oil (India)

Tide Water Oil (India)'s Earnings Easily Cover The Distributions

We like to see robust dividend yields, but that doesn't matter if the payment isn't sustainable. The last dividend was quite comfortably covered by Tide Water Oil (India)'s earnings, but it was a bit tighter on the cash flow front. The business is earning enough to make the dividend feasible, but the cash payout ratio of 81% indicates it is more focused on returning cash to shareholders than growing the business.

Over the next year, EPS could expand by 1.4% if recent trends continue. If the dividend continues along recent trends, we estimate the payout ratio will be 69%, which is in the range that makes us comfortable with the sustainability of the dividend.

Dividend Volatility

The company's dividend history has been marked by instability, with at least one cut in the last 10 years. Since 2013, the annual payment back then was ₹7.50, compared to the most recent full-year payment of ₹42.00. This implies that the company grew its distributions at a yearly rate of about 19% over that duration. Despite the rapid growth in the dividend over the past number of years, we have seen the payments go down the past as well, so that makes us cautious.

Tide Water Oil (India) May Find It Hard To Grow The Dividend

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 Tide Water Oil (India)'s 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. Growth of 1.4% may indicate that the company has limited investment opportunity so it is returning its earnings to shareholders instead. This isn't necessarily bad, but we wouldn't expect rapid dividend growth in the future.

Our Thoughts On Tide Water Oil (India)'s Dividend

In summary, while it's good to see that the dividend hasn't been cut, we are a bit cautious about Tide Water Oil (India)'s payments, as there could be some issues with sustaining them into the future. The low payout ratio is a redeeming feature, but generally we are not too happy with the payments Tide Water Oil (India) has been making. We would be a touch cautious of relying on this stock primarily for the dividend income.

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. Taking the debate a bit further, we've identified 1 warning sign for Tide Water Oil (India) that investors need to be conscious of moving forward. Is Tide Water Oil (India) not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

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